Franklin Resources (NYSE:BEN) is an asset manager providing investment service to retail and institutional investors. Funds are marketed under the well known Franklin, Templeton, Mutual Series and other brands. Franklin has over $850 billion in AUM. The asset base is more risky than is typical for asset managers with a big chunk consisting of equity investments. AUM is divided about 50-50 between equities and fixed income actually. In addition, Franklin Resources owes almost a third of the AUM to foreign investors. Retail investors also make up an important group of clients. As retail investors are more fickle as compared to their institutional counterparts, that also raises the risk profile of the company. In short; not your run-off-the-mill rocksolid asset manager. On the other hand, this type of AUM usually comes with higher returns.
On a macro-economic level, which I want to stress is not my specialty, I like the firm’s exposure to foreign countries. The U.S. has a somewhat healthy and mature market for asset management but around me, in Europe, there is a lot to be gained. Individuals control only a fraction of the capital they are entitled to. Slowly politics are moving towards an environment where individuals have greater control over allocation decisions. Franklin should ultimately benefit from that. However, it is my goal to not rely on long term macro tailwinds in any investment, including this one. Continue Reading »