BEN - Earnings call transcript Q3 2021 | Franklin Resources, Inc.

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Operator

Welcome to Franklin Resources Earnings Conference Call for the quarter ended June 30, 2021. Hello. My name is Hillary, and I will be your call operator today.

As a reminder, this conference is being recorded. [Operator Instructions]. to of conference Resources. Investor like Selene your now Head Oh, Relations would turn to your host, I for Franklin

may begin. You

Selene Oh

known discuss a could with statements in results described Franklin Reform that These Resources, unknown filings. Good us and and just cause actual XX-K which Securities Securities the are and Risk results other statements. made you to Litigation thank facts Inc., number such the uncertainties meaning differ this our are Commission, forward-looking other Form of and historical to the Private forward-looking XX-Q on and Factors regarding are morning, filings materially XXXX. Statements factors in of the from and uncertainties Exchange quarterly more statements Act expressed factors call MD&A any for implied These conference future of sections of important not risks, detail involve results. or and within in and including recent Franklin's risks, other forward-looking recent by today important joining most the Franklin's

I'd to Now over and Chief the to Executive like Officer. call our Johnson, Jenny turn President

Jennifer Johnson

Global Templeton's for fiscal Chairman; Thank doing well. everyone, Hello, our Saturday Legg the also on on specialist and and discuss thank our of CFO; investment our past call with everybody quarter. Nicholls, me This are Mason managers. is hope Matt X our for Distribution, us you, of we today Spector, to acquisition you We year today. marked landmark closed Franklin Head since Greg Johnson, its Selene. Executive results that third joining our Adam and

commitment focus strong is time, the a valued throughout and our story clients. has for our on investment delivering been at our This Star be year. the firm to North growth stated past we continues for results this As our

firms and months, significant past strategy. growth bringing executing work X through and made on we've the strides of together our the employees, the our hard XX Over dedication

and we're have in and vehicle, across growth demand, where diversified nimbler and areas on, ESG asset and positioned well sales pushing more seeing positive SMAs and around momentum created resources approach, our decision-making region our fixed with model to client region-centric Early and distribution a closer more investing. a doing the that we're key shows redesigned class, sales we income, a alternatives, working. is is We adaptable clients, we're what business including flows client type there

significant and in have sales across Our factors initiatives relationships of resulting total classes. net the flows the funds, since These deeper led in improvement to flows increased diversification and in asset are vehicles acquisition. time

X,XXX enhanced through team their Our In advisers the access relationships actively alone, deepened almost combined sales introduced with cross-selling. has to financial U.S. Franklin newly been have capabilities. Templeton

business. by growth progress Above else, acquisition, alternatives strong Since grown wealth the areas has and our we've we've this management led aligned of investment XX%, incredibly key Specifically, on delivering and terms by focus of by XX%. all in culture been XX% results. in to the SMAs

Franklin into have Our efforts a this better, year stronger translated past Templeton.

has or momentum been across Ending Templeton XXX in Morningstar array over to of by broad with $X.XX results fixed international and outperformance to and strategies X Asset continue asset equity reached quarter, reflect funds Global this X quarter. a record global of Overall, performance equities. income, strategies to ratings now a building. Mutual star Western investment high and fiscal Franklin strengthen our Brandywine this investment including to under alternative our where and funds third continues assets Turning strategies. quarter across management trillion increased

to billion specialist under Street Martin the investment International, ClearBridge, see distribution reached assets Currie, were highs $X.X majority managers and smaller a to of Turning products inflows our saw scaling flows Benefit billion. We record broader and during sources and record the net of to made positive creating our all at pleased Fiduciary asset $X.X across positive quarter, also in into next to revenue. classes net progress that net Clarion, and We in highlights. net Partners, our income flows management. Trust We inflows returned territory diversifying funds, alternatives, fixed vehicles and

an results flows funds XX our than flows the example, of XX our the quarter. with during U.S., billion. yielding and For of or outside each less collective largest initiatives top funds, are of $X with XX products positive net In our positive AUM have sales average

our U.S. we net is which Specifically, opportunity global client our opportunity. saw into distribution largest institutions, retail, flows in financial largest and

the ever fixed launched combined the we Diversified platform. the IPO was SIMs front, closed-end and fund Asset Income Western development our successful Fund. reach product of This the with partnering distribution income our $X billion of investment pre-leverage largest On capabilities our illustrates

Additional Trust mortgage a Realty include: of Street merger adding in Mortgage Benefit funds commercial Corporation, fourth July, the corporate of upon of the recent traded which acquisition the the to of yield-focused Partners closing. strategic Hill's under with assets high will publicly developments REIT and management; create close mutual credit announcement Diamond U.S. Capstead billion largest $X.X

financial our results. at Looking

operating we're in investments, sheet with inclusive that make in confidence of from leader And the cash X% enables onetime the $X.X prior closed-end Asset and industry. to and positioned the of adjusted ongoing balance billion of the just us income increased our the to Western launch be strength quarter, best sure an business a impact the I invest Our with by ever-evolving with fund to million of successful costs $XXX.X associated mentioned. in

we've proud circumstances. to of our of of I'm I past our under clients. what Finally, thank want on for their this to employees behalf efforts all accomplish year been able extremely working extraordinary

operator? Now questions, to your

Operator

Instructions]. [Operator

Davitt is question first Autonomous from Research. Our with Patrick

Patrick Davitt

wondering the if flow institutional just I'm a fairly it that's billion in can because is if that the redemption. you wrap it's mutual will mutual through an associated XXX -- funds? what on we know fund My flow the outflow first or in $X Do see question of data is more significant July. Or suggests with.

Adam Spector

were the Those were that in flows. question. that in Yes. That mutual for Thanks program. funds that mutual fund is

Patrick Davitt

launch And then and ratio costs seems guide, which on fee, the drivers you comp, the performance that close-end on comp performance Great. fee quite being suggest the the expense XX% the it would high. fund driven mentioned an of but by

is to there performance driving think about else So Or being it increase? was comp the high? something right ratio fee the that

Matthew Nicholls

No.

maybe I the think offline that was little associated in other should we compensation the fee-related performance areas rise with other of XX%. compensation. but also most the had take in a firm, it strong And we performance of

that a than I than think that. the much it's less -- more lot -- less like it's

Operator

the Fannon Dan from comes of with question next Our line Jefferies.

Daniel Fannon

these performance this but I quarter in bit to know a I the predict, fees, think, I history. and are guess difficult just to just follow up was largest you, on from

set And said of contribution. so I about a the something remarks think diverse the prepared

So of the about what this fees the quarter in can future, be think around where vis-a-vis And you about kind from? looking then given performance generally disclosures should the came might ahead, funds? limited just we talk how the

Matthew Nicholls

Yes.

So a couple there. things of

I'd all, the that management, attributed XX% alternative are of fees about largest asset to of performance specialized our First say managers. investment

attributed to investment fairly from Two, and a that's comes managers. half that the our of about group rest it specialized though, So Partners. diversified Street of represents Clarion Benefit

managers investment produced fees. So of the a specialized outperforming it's performance diversified have that that group very been have

second then future versus While of quarters. to quarter how the question, -- this put we should your this context, part and into

the asset in that I note important while growth reflects particular. think of our alternative business it it's to

eligible over X for accumulated quarter about fees It's a period, distributions, one episodic fee. years and significant funds actually. X interest This invested at this long-dated capital instance, a over the performance and performance fee, the fund several carried significant include did same other, we the performance had the a management for large several In quite had tranche performance investment resulted which time. in occurred large eligible performance hurdles that became had In cleared became which years. of

at and for the combination this performance half fee investment the along timing levels. fees specialized elevated in So other fees managers of this resulted of of performance over elevation with events or performance

on So $XX quarter. of per performance million I guidance our would fees repeat

think agree do conservative. acknowledge you'll conservative but but low, that's sounds around that fees, we think best to I quite performance be we it's

Daniel Fannon

helpful. fundraising that for of the generally the potential come here biggest growth where today, class see given in strength Okay. Can flows level about at the you from? on talk the And asset then environment the quarter. for contributors runway you and just kind the of could That's just alternatives, in kind manager

Adam Spector

classes, things few estate a firms and that areas in individual are for to strong hedge us in different number One we're private equity to is think real are of their There really they're alternatives. from and a asset quality the that We it's -- Yes. funds. alternative debt, private working we of just have.

alternatives. our geographically number alternatives diverse an advantage It's for of flows. alternatives ESG money U.S. them, the being have just seeing in an able especially world also to of growth component We're estate. and real around base. a We to not our have A raise in

raising ESG I a net to alternatives access sure retail in of the combination And strongly. we're we I'd alternatives access well. not finally, money to say make time just alternatives. as alternative institutions how democratize spent that side, the so and of can concentrating resonating, worth in And And lot on think, to is from quite it's segment ultra-high that

All strong of in continued that, momentum have me, to there. ability speaks to the fundraising to

Jennifer Johnson

about out in strongest we it, complicated Clarion the and both add, and it. retail of experience. well franchise, And just fits probably is and to sell retail think you in some serious our managers retail me alternatives, success And it let very for our are then alternative income-generating. about it think of is of discussion to with how I is figuring focus one biggest democratization lot a our And space. if great of the -- an -- Adam, us that franchise And in do area had have for the is a we've BSP,

a educating that have, So upside for having us it name the But that's on there. the getting there. brand it's think that, relationships matter opportunity out we a of the huge just and advisers we

Matthew Nicholls

About management. to $XXX put X period. have in good ago, where we and over and the alternatives an growth in about Obviously, includes it had at that under least, we've also years organic Partners rate acquisitions, billion terms also into that where under but large and of $XX embedded perspective X.X we contains management, we Benefit assets are. It's Street Clarion, generally come alternative in billion now XX%,

of terms making acquisitions organic in work growth. it's So and both opportunities

Adam Spector

that on distribution a that And is started the focus the U.S., would just to specialized add last traction only final there. I we're we're that add to sales was seeing continuing in And already. group to from it alternatives thing we quarter resources and

Operator

next Ken Worthington from comes question JPMorgan. Our with

Samantha Trent

This for on is Samantha Worthington. Ken Trent

equity fund quarter. out first is fund our this redemptions that just the question So equity on on were called these

spring asset generate assets? you little equity revenue. And little, assets an outlook us for on this revenue? from very as give that these that generate in manages you good much any, see of highlighted how low-fee do what these is business? Could You if kind just a indication the an And

Jennifer Johnson

know don't our like think -- lower I -- have try it, to that through smart obviously, we in those I primarily that things mean, passive, beta we and have if you you are I obviously ETFs.

billion active. look at you of If $XX in it's ETFs, XX% our

low because I'm bit little So think had to managers, ago kind of relationships can't smaller honestly to head. those just top the any trying were a through had the aren't of local of I managers we lower. -- fees. with -- of is kind big which path I that that think obviously, I'm These chunky any -- fees. my off don't trying But years obvious, I'm lower acquired unique stalling

Samantha Trent

just then more. And Okay. one

You added make of a to to -- partners? compare with with these agreements, Maybe talk Franklin number way these with the making existing talk agreement. the of distribution of distribution new about you also commentary and of work partners. then the third about more with And agreements these how are its trying that kind the cost distribution nature in your mentioned just just list

Adam Spector

would result effort don't What think cost there's highlight cross-sell. concerted I agreements direct of to are that distribution. a Sure. real change added is of in a a really I the

we've agreements or a additional Legg lot Franklin versa. legacy And products of done are vice those both. Mason onboarding So agreements to

more legacy that about -- and more to advisers we're legacy cross-sold One Franklin do able on called broad statistics the because on or U.S. that of out We're new advisers is is who to taking only on in to Mason. products that used we've with putting products platforms. Legg do the we've agreements X,XXX business

on. platforms also to real benefit a new We see those geographic taking

about had you flow. AUM example, EMEA, If XX% as stronger in historically it's XX% think about the an of of terms retail of a distribution is Franklin Legg Europe, footprint, but Mason about legacy in distribution, our where

has platforms us. those a getting immediate So onto had products real benefit to

Operator

Our with next Hawken comes Brennan question from UBS.

Brennan Hawken

your where opportunity to speak channel? You and customization Can offering. are make within you to you that opportunity? capabilities or those with want presents investments to what referenced whether enhancements and within to that offering that not you and a today that revenue the enhance further that capabilities SMA possible customization execute And

Jennifer Johnson

fit that important, like things portfolio. demanding The tax a this and or just or whether start, with business Adam want. XX% we customization just individual About of more into then of ESG fractionalization that individual clients harvesting me harvesting can become kind accounts to fintech, technology, Let customized, customization And add believe already very today our shares it. tax is like of it's going more that to or it's for fundamentally whether things is much clients for to tilts tilt. of SMA and it are

been Trust year. is they That's with of going holdings the XXth manager, come if year celebrate we're and that. I maybe they mean to company worth high Fiduciary around -- oftentimes portfolio the that's did. built, a what people so manager you're single customize that think a you high-net concentration Now this rest network our I a from

high course, So they tend people. to tax and be bracket a -- of

we're tax demand got financial masses. net and has is to seeing, to that Fiduciary management much is is What done by more just world them what managers fee-based the So provide key traditionally services the is this, Trust, we've high about worth on do. the talked bring they the of type like were to and advisers

we trend this And to is here stay. think so

We want anything Adam, to have SMA you I continuing while. to know, our develop capability the a it. to to We're that? that within quite day to had closer And so for you're add if day,

Adam Spector

Yes.

that business general think about ClearBridge continuing SMA business of historically the It's that Mason is XX% an legacy our It to the SMAs. the Jenny XX% terms operational and Legg I is I infrastructure $XXX would we're did What and really expand across our investment been for that more high grow, had business. our the into and incredibly continuing that billion such SMA SMA strong hit roughly in flow folks. reach in already We've the business coming net Franklin of points to there. to about use of say to now in platform teams. technological platform able from is

to part advantage benefit legacy seeing, really organization. So the a again, of using the entire of one firm

Brennan Hawken

XX%? But I've definitely there is the success. Yes. about tied add to you heard to anything opportunity can that revenue those -- that

Adam Spector

I business, be would at because SMA that when revenue to in fund good general, look tends say, mutual to in stickier tends business. very our be it business we it

impact. over the longer to about We extent positive think quarter-to-quarter for average tax overall would which goals you performance a longer-lived definite has that those and becomes also meeting to I relationship more that which that have again a leads client's and client, assets or about I revenue are a impact. revenue ESG the has efficiency say really goals, that whether time, life, customize a less goals,

Matthew Nicholls

perspective, Brennan, it's margin also, lower costs fee, business. higher it's even profitability It's a though to -- less from It run. it's

Brennan Hawken

exists use on Because the existing and that -- infrastructure the so you incremental... it

Matthew Nicholls

Yes, correct.

Brennan Hawken

Yes.

like to a reliable Matthew, last of ratio then, And XX% like is ballpark? seasonality there the you think is about commentary like understanding at in fees? $XX which the comp here the of the performance kind it half that nature quarter. quarter got the used before. mix to as especially your we're almost usually clear, of think more chunky the about pretty fees million business And we as maybe getting about after looks a But ballpark seasonality and of probably Okay. conservative, the -- a Should Franklin. there to a I But the performance new

Matthew Nicholls

I -- that's I a that's Yes, think good think Yes. yes. correct,

the way mean I it's thinking Patrick's at think I I question. about it. look to was

quarter quarter is have the closed-end think compensation in it we versus fund been the I performance-related terms we without launch last costs, that expenses way this increased the expenses down look quarter-over-quarter. slightly of without and would the at

in XX% think and important. generalize. which difficult specialized think compensation. that's performance terms in XX% it But you quarter, roughly allows the But manager, this depends, bit answer. which And of I Brennan, which or fee calculate mandate that's really it to is, a to it's on the that of So little performance-related I investment right

where the terms In of comp the to update fourth comparing you it advantage this now. we're the a broader of at ratio, -- just and I'll for to take year give quick for quarter

consistent quarter, expect next consistent benefits last Our X%. XX% with as XX% down to by be and quarter. can about quarter, comp was ratio, I being was XX% the you comp to and see, for the that to That's which

the systems reductions probably X% So which comp by to of terms and that quarter. and up in the benefits even fourth in year, and compensation be ultimately X% that's driven next fourth technology, into we somewhat line. And quarter, the initiatives, to helping slightly, were information expect that's outsourcing

terms know, that, in fund about X% occupancy costs. slightly launch flat higher that the the In interesting followed meaningful XXXX. in as expect But this there quarter quarter, by working because this remain opportunities we result occupancy because for you flat. in fourth to G&A sharply some reductions higher Without the perhaps was expense, to X% have of higher. would closed-end quarter, And on but expense, higher of in we're flat G&A, been then

our G&A least to T&E, XX% guidance normalized million quarter? assuming fourth the -- lead of which of for for the fourth it, at terms call expense normal In quarter, let's we're $XXX about

Operator

question Deutsche from Bank. Bedell with next Our Brian comes

Brian Bedell

Great. or that that question. on clarification Is One growth year-over-year? quick sequential

Matthew Nicholls

which Brian, on what? Sorry. sequential

Brian Bedell

that is -- it sequential is Brennan, gave you guidance growth? expense the On

Matthew Nicholls

Quarter-over-quarter.

So third quarter, fourth yes. quarter versus

Brian Bedell

ESG, $XXX referenced, to up billion AUM billion quarter. prior broader question because from that. My that in of that's asked the I $XXX I the on wanted clarify is Okay. you

if talk direct can net exclusionary been an compared as that strategy to as investments So into kind recategorized as ESG. to of reclassification ESG $XXX would funds investments? or have that you with flows due is importantly, proportion in that about say opposed you now product any of then was what billion, of what sustainable And

Adam Spector

I to me based think Instead, when it's I bit at AUM primarily Article let you details. say if either X single all. try look Europe. would about I something general, So would that performance is $XXX every that. that say, try type because or you assets, the billion have our exclusionary I in X going not don't but think right $XXX just Article at I that assets billion, is to billion our what tackle strong about a flows in European to number, seeing had in market. to XX% in flow our it categorize Most flows, XX% due I as and little the EMEA That's If be market we're or represents very now. ahead key and assets, like believe the line of of European think our we of $XXX are roughly definition. Europe Article there about a of XX% how region, think in the that with it, that take is more is. that really X pipeline. change exact X especially ESG to

important. more becoming So and it is more

So I over think time. that rise you'll see number

Jennifer Johnson

that we category. add would I break of kind And that

that of Shariah and it. Article value pleased are So a like Western. so Article put thematics, then across that X But we all and Martin good sukuk with can think many Article We X, the for SIMs. and tilted, way really things -- about done kind X, against qualify values XX we're think it is And Europe for X, to that funds Clarion is and we impact. our talking framework Franklin, we X products X. And it's strategies satisfying then Currie, has it categories, -- what's X into of diverse be have

we really from that categories, all is have X, think, of So across X positioning. funds really SIMs, these just our different which into good, we fit

Brian Bedell

getting I breakdown. maybe think the clients designated versus retail earlier about, you question X and And that ESG just also retail be if able to Article That's into more -- response you are And customized customize follow-on SMAs. it helpful. Is then classify in X? products this Okay. to you The on mentioned the -- another that. a being would institutional will SMAs, considerations as

about how maybe you can is. talk significant So if that just

Adam Spector

part that Yes. the not I XXX, because harvesting. is SMA lot in that that really of of would customized tax number say huge a customization is loss a

ESG. in I don't markets in institutional that's ESG any of huge seeing think mandates integration. think new it's unless win hard So have you that Institutionally, we number. are And in a for part Australia, I Europe, demand to significant certain

theme So a I see as across both that and retail institutional.

Brian Bedell

fair $XXX it then Is number Got say, market the And to out billion $XX the sorry, ESG into what was flow billion. you say for that it. products the billion $XXX would and inflows you it than, performance -- that of market consider back you I'm $XX mentioned, billion quarter? inflows to just if had more for lastly we the performance drove second to

Adam Spector

I don't I going to on to have think back to number front in me. of that. that we're have you get

Operator

question Katz Our Citigroup. with next from Bill comes

William Katz

fund question, mentioned first just don't Maybe Matt, of back expenses way know just fourth And how initially at thinking What I you're then performance for there's that's sort with as coming. vehicle is about the quarter? 'XX, remaining a synergies the comp sort there's for market on through that to side comparison new. the or synergies you maybe maybe is, Any your broader some deal, the least think of you fiscal if question contribution close-end fee perspective? anything moment. excluding to coming assumption the ring-fence if

Matthew Nicholls

question. first the The first What question, Bill? was

William Katz

like been Or markets for quarter, I just that assuming asking it's historically? on just it... fourth So is the expenses, was about is guidance the flat

Matthew Nicholls

Yes.

the assuming quarter. for Okay. market It's flat fourth Yes.

performance rate might versus anything be I elevated. -- about that that and at fees So talked the just

with with on fourth amount a that just obviously, achieved about of merger million. at achieve moment In on expect about notional rather as terms reminder, to transaction, early That XXXX then talk means views we to when quarter that that fourth bit provide other little the we associated you or quarter. the focus achieve the $XXX XXXX, it's, a of But expense amount the year-end. the XXXX, will million, a in reductions we've by $XXX the and

XXXX, sort in expense ground the of reductions that's terms all a remaining So else stake of equal. in in

William Katz

And what's happening I things. non-U.S. Okay. out sort the you versus couple following of component? different look versus any on which the data, couple equity Maybe positive unpack When of a still is U.S. the appreciate unpack could just you exiting? what's but follow-up, the of at you door then U.S.? of And book what's on I up the to just coming international sort quarter, just through caught maybe outflows, walk had, imply I that this would what in maybe that then that you a was of outflowing. sort could a turned color ESG, difference called between idiosyncratic

Adam Spector

Sure.

So let me try to think about.

to think And the year-to-date. AUM. thing from bring regional are cetera, ETFs, with investment client our cross-selling U.S. We're are a It's done total incredibly continuing positive, start And flow the and somewhere really to bear quarter net alternatives, teams, we Things more XX% XX% from other our biggest between is in working relationships. largest well. partners. both I across really of to perspective, there. do market. for then well our and We're we've to to well So U.S. et really specialists is the well

been India. outflows of know Asia. our roughly you it. significant portion Asian the and business and Americas are a That's have -- are European The So really what's flat, really going been in strong. on outflows in that's

Asia we've of we're a bit Some Japan. about good outflows is talked Asia. a in one-off seeing also Asia. those were the The that That as had some little well. news And of in equity then now issues hurt we've turnaround in

is there. Our really and pipeline diversified Japanese new building. we're clients more It's adding

Our business incredibly is retail strong. Australian

months we're positive Australian retail. net a XX in row something think I in like flow in

turn So and that's see the slowest for the been been really Asia region around, that's starting to us.

distribution think to one of future. going day really Bill, your and the I really that's we of across make that's grind, of terms question day do to the continual And see that's what really in us working. assets. kind that just the in out sales board. as that's other defend having In the about for well And part machine,

just the So really that SIMs plan. It's terms on is been got that's numbers. will We're way a I the shortly. think We've lot well big and We're on, for really pipeline, things impacting teams. our machine executing and though, of we're chunky lately, working hasn't of break bigger some in start working distribution of distribution been breaking what's central the with the the in negative working. our to lot, teams deals our us those stuff a

Operator

Our next Schorr from question Glenn with comes Evercore.

Glenn Schorr

contributing. on diversification biggest that about we both flows. down all I I funds that curious gross outside the the part they're still mainly I how net net want about on away take But is you efforts I think XX you up seasonality. the to sales finish on increased are the sales your large XX the and am also, the largest that -- from flows, on on like aren't And though XX. want about flow thought. I given funds to So quarter-on-quarter, what your still I see should of top large. expect there, said not. like the diversification I the could the you great. anecdote gave to because noticed But gross big us talked fund XX of

Adam Spector

combined and have So back we the the quarter data two as gone always slowest things. as for seasonal a gross for companies, sales. We've there for this was far is One, effect. really

a is there seasonal So effect that's historic.

in top-selling or like In think our about DynaTech still Western among terms core funds of fund, or the largest the right, if things flow. are positive those you income and funds, are

largest So a of still are funds the number growing.

a largest are say, really focus to the we on funds and I that to think speaks one funds momentum. one the think in a where is a that growing, funds have stable I little a for balance the And when under, do lend in growing. come. longer-term type too but And the see the base number not we team, it's of focused got years of lot one think only investment are trying of the geography creates And vehicle right instability the we're to So that We've you're of billion absolute that and stability that between largest really $X build business. to we things business. one

that are So those few glad add are mix positive, of growing as flow huge well. want diversification we funds a still to but to the we're net

Operator

Alex Our of next the question line Blostein Goldman Sachs. with comes from

Alexander Blostein

for outlook quarter your in with market the with fund last saw start you to wanted I the closed-end the obviously product. We market.

of kind been conducive fairly talk environment well. most peers as And strategies market sense. a things? the of your maybe to active bit would so, more those have of the do little make if that where then Some there Is about

Adam Spector

Yes.

I vehicle. a we've ability is a structure done there's think funds really way significantly of now to what that's ago. years kind were closed-end There's in than little to an that seen the more receptivity different they

it I works for well well for the the investment think investors, distributors. as for manager as

us again. different We're billion for products. Certainly, you have And see think we're of discussion raise, in $X more a range with them. number you want market of I to going currently plus think more. when you'll distributors see So come of to to I do a

Alexander Blostein

the or over then years. of out that of and business the couple call, acquired guys things discussion diversification around the And a of you kind last building the have Great. some lot obviously, and on of scaling built really

organic profile well. return about of opportunity from kind as there How a M&A give of think Franklin? overall basis perspective, us be as part the your on capital forward thoughts updated an I maybe As big

Matthew Nicholls

go -- ahead, Jenny. think I

Jennifer Johnson

and let me then maybe Well, I Matt, just go. to was going -- say can you start,

Matthew Nicholls

Sure.

Jennifer Johnson

balance kept So always we and is be we believe a opportunistic strong -- ability. product we've have said the because we industry. the in lineup this, sheet It we've want to we've the kept -- but and broadest have

And just we so than from be go to And a more an opposed acquisition, would will strategic will assets that as a some often, we acquisition only -- adding you're there's and adding out spend buyer do capabilities. to assets. large-scale when

We major on when kind clear we've for unlikely, grow It the on came think, never think I that say alt. areas us. growth We focused alternatives open we'd right is opportunity to growing if Having a priority So it's it's to we're but probably we said up, we that, of expanding. that the want it. opportunities, pretty view been, about business. our never our be

I a than years, and all like as billion the do XX business, more high Trust, market. there. what grow is as they their that celebrating business. our we net that fragmented It's finding most it's we worth less capabilities space. demanded. of those already to than has to RIAs tax still think that in we'd and acquisitions think realize While who things there. and want trust their firms We've to there's with very alt are bigger again, XX% again, on join And education. generation the a bigger has more planning, we're that We, more of like we're small opportunity there's fiduciary people Fiduciary and the pressure now our All is one players stated that $XXX premier far AUM, being

really got we've capabilities, do distribution. see greater have say we to at space. things will the fintech $XX million. turned anything billion, you'll we And I ourself on that that there ETF are would a -- on be ETFs, be something be you We are today help phenomenal there. like smaller side, us, more to -- out acquisitions. came specifically see things more a scale about think just if to -- that -- too, that to said, in team I investment, say to us. we was have we love if distribution types we past then just to a products We're we've growing opportunities, to were have would think And XX% in $XX in our things to places Matt, continue to region that interesting already and But There'll good in specifically like would I investments at active, we see we'd add? billion for we'd be actually look then talked it's but could franchise. in $XX It those or up there. designed when investment good like these of particular us expand our think And Embark that so the penetration continue you'll that our we designed focus are a

Matthew Nicholls

you And Yes. covered it perfectly.

on about of to mean, I alternatives probably the that that. Alex, I of than significantly side, just the a we at business our And be little think, more I more XX% sort the moment. way think would alt think that's the bit about is adjusted like revenue we

small we've the asset the area both As have think missing alternative and example, such arena. things bolt market we We pleased we're overall nothing of a what overall. you asset have got strategy with and -- a companies the We rate very Partners. in share Street which group real space. components just the to growing But it's we as have, really of know, alternative growth sort is we've and of transaction. organically management, it's the for ability formed, that the And of on, asset alternative grouping equity large great Benefit we REIT asset a and in have there's

on focused a put distribution. think and mentioned to the make very home out to got very another and Jenny good we we're So there. we -- already companies we've wealth those for in and think that, we're place attractive structure right And it very

all fully us I The of across acquisitions, other allocation into we investing that invested couple terms many question. around with of leaves hundred our make billion is, be will dividend repurchases a unlevered it's and in dollars a account the to that that's take to approximately this $X million compensation profile with in offset in at important and in sure the in ways, firm SIMs. thing about capital share very the And income in you the least if think way, of it a now, the invest terms grants, of business in firm, would

I already over our new and allocated acquisition, we billion AUM. the since in $XXX co-invest of for announced example, that mentioned million capital turned into we've $X think that's seed we remarks, prepared

that return a perspective. turning in of like tenfold regard almost in terms it's So it returns from AUM an

that about these areas that. spend see active we And frankly, and year more size very balance opportunities of very to there. we're disciplined So strategically. think gives money lot sheet across being how The a we each We're our confidence us about of

Operator

Our Stanley. next Morgan comes Cyprys question the Michael from of with line

Michael Cyprys

little I alts more bit was products just retail alternative the set, hoping to on within in the opportunity the channel. a dig

could set the little Benefit just with talk If are a thinking bit Street, would be for a private that opportunity seem with you It about could there? Can there you -- how on opportunity you elaborate entities you Clarion, be REIT, And opportunities about know public this for I some set, sense? which products just how have could with private Franklin? guys the the there. make a can most big

Adam Spector

opportunities like the sounds work hit important marketing really you because alternatives It our think I of significant us attention. on spending we're where group Yes. most you've X in for

need the to I to looking work think other our distribution for. they're understand with that thing do is to partners we really what

we've our The retail some hedge the in other business seen growth in thing is fund channel.

characteristics that of like some that BSP, could in and traditional retail traditional I biggest the really in as of that it investments expect the the seeing ways would would that offerings. structure as in asset Clarion, that an to more classes it a so alternative are the of more well to class, I be one alternative think has well. feel fixed there asset we're say income, from two strong. as channel obviously, things more But also

Jennifer Johnson

one want say that they getting a is in concentration unbelievable Clarion a Clarion, some have our here, period, has just of only been coming mean at would you got out the managers, And COVID really diversification. I institutional and that take of from distribution feedback a concern Adam, large we're with distribution. and performance this of $XX-plus low billion, they you And partners I and

tremendous desire And we've diversify team think really to and support the side distribution their there. there distribution on because just And there's business the alternatives upside managers. the so just there's products the we got a to

Adam Spector

thing And that kind thing. fundraising that the be channel in I the final tends multipronged would of is a add to

then You period back of number later, come quarters. bring x fund to and X, a you market a year can

to do there alternatives. process our of allocating I so become potential more with those real the as growth to in the raises see brand and sequential the And have comfortable advisers

Matthew Nicholls

then asset like strategies additional other point And ours. the of think that distribution sort that connection that we because with business is we there own don't very large have a is are very we logical the attractive yet capability alternative don't some

Jennifer Johnson

ability while they're our little And showed franchise talk we of private a -- put we mutual assets about very some venture small the And growth illiquid in to came funds, out of a actually don't we in Franklin think it, strong at but bit I funds. individual have the they because group.

in lead traditional they're other of don't billion a But now on large -- it's think be I part our of selected competitive as about they're VCs I $X starting to kind albeit so venture mutual it probably a And know, very investments, against Matt, funds. within offering.

because we're excited lot there. really there's we So opportunity of think a

Operator

to call over Q&A President final comments. Franklin's to the for would today's CEO, hand concludes Johnson, now I back session. and This Jenny like

Jennifer Johnson

their I variant for want through wish these phase times. just thank want everything And Delta the through to and next taking time this the everybody to healthy the time everybody to I and Yes. call, today. to you we appreciate of guys stay

So thanks, everybody.

Operator

call. concludes Thank today's you. conference This

disconnect. may You now

Franklin Resources (BEN) 3 Aug 212021 Q3 Earnings call transcript