Franklin Resources, Inc. · NYSE:BEN
Franklin Resources — Investor Day (May 2014)
37 slides from Franklin Resources's investor day presentation, May 22, 2014
Slide 1: Franklin Resources, Inc. Investor Day 2014
(3) Franklin Resources, Inc. SZ nogunmers ~~ Investor Day 2014
Slide 2: Agenda
Agenda (Eastern Time) 8:30 a.m. – 8:50 a.m. Conference Welcome (Presentation) Persistence and Perspective 8:50 a.m. – 9:20 a.m. Built on a Strong Domestic Foundation (Panel Discussion) 9:25 a.m. – 9:55 a.m. How Being Global is Different at Franklin Templeton: (Panel Discussion) Cross-Border Perspect
Slide 3: Forward-Looking Statements
Forward-Looking Statements Statements in this presentation regarding Franklin Resources, Inc. (“Franklin”) and its subsidiaries, which are not historical facts, are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. When used in this present
Slide 4: Persistence and Perspective
Persistence and Perspective Greg Johnson Chairman, CEO & President May 22, 2014
Slide 5: Franklin Templeton Investments: A Premier Global Investment Management Organization
Franklin Templeton Investments A Premier Global Investment Management Organization AUM Diversification • MORE THAN 65 YEARS OF EXPERIENCE (as of March 31, 2014) • $895 BILLION IN ASSETS UNDER MANAGEMENT1 Hybrid 17% Fixed Income Cash • OVER 650 INVESTMENT PROFESSIONALS 40% Canada Management Asia-Pac
Slide 6: Strong Growth in Assets Under Management
5 Strong Growth in Assets Under Management Global Assets Under Management (10-Year Period Ended 3/31/14) $U.S. Billions TOTAL AUM $900 $886.9 BILLION INTERNATIONAL CAGR: $600 9.7% $306.4 BILLION U.S. $580.5 BILLION $300 $0 3/04 3/06 3/08 3/10 3/12 3/14 CAGR is Compound Annual Growth Rate.
Slide 7: Investment Management Expertise
Investment Management Expertise Focus on Investment Excellence Global Perspective Shaped by Local Expertise Strength and Experience
Slide 8: Investment Management Expertise
Investment Management Expertise Focus on Investment Excellence Global Perspective Shaped by Local Expertise Strength and Experience
Slide 9: Broad Range of Investment Capabilities from a Breadth of Investment Management Teams
Broad Range of Investment Capabilities from a Breadth of Investment Management Teams FRANKLIN TEMPLETON INVESTMENTS Franklin Templeton Templeton Mutual Franklin Franklin Franklin Franklin Equity Group Emerging Global Equity Series Templeton Templeton Templeton Templeton Markets Group Group Fixed Inc
Slide 10: Comprehensive Investment Risk Management
Comprehensive Investment Risk Management An Essential Component of the Investment Process Guiding Philosophy The 3 Rs: Recognized, Rational and Rewarded GLOBAL RISK MANAGEMENT Investment managers are supported by independent risk management specialists who are: INVESTMENT MANAGEMENT • Located around
Slide 11: Strong Investment Performance
Strong Investment Performance U.S.-Registered and Cross-Border Mutual Funds Percentage of Long-Term Assets in the Top Two Peer Group Quartiles (10-Year Period ended March 31, 2014) Total Equity and Hybrid Fixed Income ($601 Billion) ($317 Billion) ($284 Billion) 88% 85% 91% 83% 88% 85% 73% 82% 91% 7
Slide 12: Alternative Mutual Funds Continue to Grow
Alternative Mutual Funds Continue to Grow Increase in Demand for “Liquid” Alts Drives Retail Growth Growth of Alternative Strategies in ‘40 Act Funds & UCITS (US$B) 1,200 1,000 800 600 400 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 ■ Commodities ■ Flexible Allocation Funds ■ Hedge Strategies
Slide 13: Broad Coverage of Alternative Investment Opportunities
Broad Coverage of Alternative Investment Opportunities Private Equity & Debt Strategies Solutions Strategies • Private equity • Multi-asset, multi-alternative • Mezzanine financing • Custom solutions • Infrastructure financing • Advisory solutions Real Assets Strategies Hedge Fund Strategies • Commo
Slide 14: Investment Management Expertise
Investment Management Expertise Focus on Investment Excellence Global Perspective Shaped by Local Expertise Strength and Experience
Slide 15: Our Global Research and Trading Presence
Our Global Research and Trading Presence Boston Fort Lauderdale Edinburgh Bucharest Bangkok Calgary Fort Lee Frankfurt Istanbul Ho Chi Minh City2 Los Angeles Miami Geneva Moscow Hong Kong Rancho Cordova New York Leeds Warsaw Kuala Lumpur San Mateo Short Hills London Seoul Stamford1 Milan Chennai Sha
Slide 16: Local Asset Management Capabilities Address Home Country Bias
15 Local Asset Management Capabilities Address Home Country Bias The established date refers to either the year the acquired company was established or the year Franklin Templeton Investments opened an office in that country, whichever came first. 1. Managed under the Bissett Investment Management b
Slide 17: Global Distribution and Support Services
Global Distribution and Support Services PRESENCE IN 35 COUNTRIES CLIENTS AND CUSTOMERS IN OVER 150 COUNTRIES United States (1947) South Africa (1997) Bahamas (1968) South Korea (1997) Canada (1982) UAE (1997) Australia (1986) Spain (1998) United Kingdom (1986) Sweden (1998) Hong Kong (1987) Russia
Slide 18: Building Global Scale
17 Building Global Scale Countries and Regions with more than $6 Billion in AUM $580.5 $38.2 $38.7 $28.3 $29.4 $25.1 $21.1 US$ Billions $15.7 $16.1 $16.2 $12.2 $6.9 $7.6 $8.3 $8.4 $8.5 Central & Singapore India Benelux Korea Hong Kong Gulf & Switzerland United Australia Taiwan Latin Germany Italy Ca
Slide 19: Investment Management Expertise
Investment Management Expertise Focus on Investment Excellence Global Perspective Shaped by Local Expertise Strength and Experience
Slide 20: Investors Increase Allocations to Equities
Investors Increase Allocations to Equities Not a “Great” Rotation, but a “Good” Rotation Industry Equity Net Sales (US $Billions) & Organic Growth (%) 50 12% 25 6% 0 0% -25 -6% 1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 11/12 1/13 3/13 5/13 7/13 9/13 11/13 Equity Sales Organic Growth In
Slide 21: A Rotation within a Rotation
A Rotation within a Rotation Assets Moving to “Next Generation Debt Strategies” Industry Fixed Income Category Net Flows 2012–2013 (US $Billions) 61 Bank Loan 55 Nontraditional Bond 24 Short-Term Bond 24 World Bond 11 Ultrashort Bond -7 Short Government -29 Inflation-Protected Bond -34 Intermediate
Slide 22: Breadth & Diversification Produce More Consistent Growth
Breadth & Diversification Produce More Consistent Growth Pre-Market Organic Growth (%) & Net New Flows by Top Funds Asian Financial Crisis Housing Bubble Burst Flash European Russian Crisis Debt Crisis Crash LTCM TMT Bubble Global 13.4 Burst 9/11 9.9 9.1 Financial Crisis 6.0 7.4 4.7 5.8 5.6 2.7 3.2
Slide 23: The Value of Global Diversification
22 The Value of Global Diversification Winners Rotate Net New Flows by Top 10 Regional Offices Fiscal Years 2003–2013 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1 United United United United United Gulf & Latin United Gulf & Italy Italy States States States States States E. Med. America
Slide 24: Panel Discussion: Built on a Strong Domestic Foundation
Panel Discussion Built on a Strong Domestic Foundation John Lusk, CPA – Moderator Ed Perks, CFA Executive Vice President Executive Vice President Investment Management Director of Portfolio Management, Franklin Resources, Inc. Portfolio Manager Franklin Equity Group Peter Langerman Tom Regner, CFA C
Slide 25: Panel Discussion: Cross Border Perspective
Panel Discussion How Being Global is Different at FT: Cross Border Perspective Mark Constant – Moderator Lisa Myers, CFA, JD Treasurer Executive Vice President Franklin Resources, Inc. Portfolio Manager, Research Analyst Templeton Global Equity Group Sonal Desai, Ph.D. Jed Plafker Senior Vice Presid
Slide 26: Panel Discussion: Local Expertise
Panel Discussion How Being Global is Different at FTI: Local Expertise Jennifer Johnson – Moderator Executive Vice President Chief Operating Officer Franklin Resources, Inc. Vijay Advani Executive Vice President Global Advisory Services Franklin Resources, Inc. Purav Jhaveri, CFA, FRM Managing Direc
Slide 27: Panel Discussion: Growing Alternatives and Solutions
Panel Discussion Growing Alternatives and Solutions Bill Yun, CFA – Moderator Dennis Rothe Executive Vice President Senior Vice President Alternative Strategies Consultant & Investment Research Franklin Resources, Inc. Group – North America Franklin Templeton Institutional, LLC Andrew Ashton David S
Slide 28: Delivering Shareholder Value
Delivering Shareholder Value Ken Lewis, CPA Executive Vice President Chief Financial Officer May 22, 2014
Slide 29: The Building Blocks of Shareholder Value Creation
The Building Blocks of Shareholder Value Creation Revenue Growth Operating Leverage Capital Management
Slide 30: Revenue Growth
Revenue Growth Growing Revenue, Not Just Assets Under Management Total Revenue (US $Millions) vs. Average AUM (US $Billions) 7,985 8,275 Revenue: 7,140 7,101 9.2% CAGR 6,206 6,032 5,853 852 5,051 808 4,194 4,310 694 706 3,438 582 605 571 482 442 411 340 Average AUM: 9.6% CAGR 9/04 9/05 9/06 9/07 9/0
Slide 31: Operating Leverage
Operating Leverage Growing Operating Income Faster than AUM Operating Margin (%) vs. Average AUM (US $Billions) 37.3% 37.5% Operating 36.6% Income: 34.8% 35.4% 33.5% 852 12.8 % 33.3% 808 32.3% 28.7% CAGR 29.9% 694 706 582 605 571 27.1% 482 442 411 340 Average AUM: 9.6% CAGR 9/04 9/05 9/06 9/07 9/08
Slide 32: Capital Management
Capital Management Primary Uses of Cash Seed Regular Capital & Dividends Strategic Investments Liquidity Management & Regulatory Capital
Slide 33: Investing in the Business
Investing in the Business Product Innovation and Strategic Acquisitions Templeton begins Sales Templeton BRIC distributing office fund is launched cross-border opened SICAV funds in Italy Franklin Templeton Distributors, Inc. is The Franklin founded by Rupert H. Tax-Free Franklin Templeton Johnson.
Slide 34: Strong Growth in Dividends
Strong Growth in Dividends Increased Every Year Since First Dividend in 1981 Average Annual Growth of Regular Dividends 23% 16% 13% 12% 12% 11% 11% 8% 1-Year 3-Year 5-Year 10-Year BEN Peer Group Median Source: Thomson Reuters and company reports. Peer group includes AB, AMG, BLK, FII, IVZ, JNS, LM,
Slide 35: Share Repurchases
Share Repurchases Accretive to Earnings Per Share Change in Ending Shares Outstanding 15% U.S. Asset 10% Managers (ex- BEN)1: 2.2% Compound 5% Annual Dilution 0% BEN: 2.0% -5% BEN: 2.0%Annual Compound Compound Accretion -10% Annual Accretion -15% 3/09 9/09 3/10 9/10 3/11 9/11 3/12 9/12 3/13 9/13 3/1
Slide 36: BEN Delivering Long-Term Shareholder Value
BEN Delivering Long-Term Shareholder Value Price Total Average November 30, 1987 to March 31, 2014 Change Return Annual Berkshire Hathaway – Class A (BRK/A) 6,360.35% 6,360.35% 17.14% Apple Inc. (AAPL) 6,405.94% 7,276.21% 17.73% Franklin Resources, Inc. (BEN) 8,505.06% 11,922.50% 19.93% 14000 12000
Slide 37: Franklin Resources, Inc.
(3) Franklin Resources, Inc. SZ nogunmers ~~ Investor Day 2014