Franklin Templeton Investments of San Mateo, Calif., appears to have found quite a sweet spot in the industry. Assets stand at $624 billion, the company says, as of June 30, 2007. And sales through financial advisors have been growing aggressively.
"In the United States via financial advisors, our gross sales are up 50 percent vs. fiscal year '06," says Peter Jones, president of Franklin Templeton Distributors. "And our market share has gone up, from 12 percent to 14 percent in the non-proprietary channel [which excludes fund sales made directly to investors]. And net sales have increased dramatically."
According to the Financial Research Corporation, which tracks fund flows net of proprietary fund of funds and money-market assets, Franklin's assets stand at $321 billion, making it the fourth-largest fund group in the United States. Net inflows in 2007 through July stand at nearly $12 billion, up from $1.5 billion in the first seven months of 2006.
Performance has been a key factor in the firm's success, Jones says. "We have consistent, above-average performance and a conservative approach. That allows us to stack up very favorably against the competition."
As of June 2007, the Franklin Income Fund (FXINX) is up more than 9 percent per year over a 10-year period and more than 11 percent a year on average since its inception in 1948. The fund, which Morningstar gives five stars, is about 48 percent invested in stocks, 44 percent in bonds and the rest in cash. It includes more than $60 billion in assets and 247 holdings.
"The fund has been trading for more than 50 years," Jones adds. "It offers competitive dividends, and people sleep well with it at night."
The income fund is one of three funds included in the popular Franklin Templeton Founding Funds Allocation Fund (FFALX), which stands at $15.8 billion in assets. Other holdings in this five-star allocation fund are the Templeton Growth Fund (FGTIX) and the Mutual Shares Fund (MUTHZ). Top individual equity holdings as of June 2007 included Pfizer, Tyco, Siemens, Microsoft, News Corp., and Royal Dutch Shell.
The allocation fund began trading in August 2003. "It's a package that a wholesaler came up with, because it makes sense," shares Jones, who has been with Franklin Templeton since 1989 and was the company's first retail wholesaler.
The diversity of the fund family highlighted in this "turnkey" product is another key factor in the company's success this year, explains Jones, who oversees U.S. retail sales and investment platform development. "We have good performance across asset classes and can build deep and strong relations with financial advisors, as well as improve their performance and productivity. With 25 four- and five-star funds … we can become the financial advisors' primary partner."
Other popular products are the Templeton Growth Fund, Mutual Discovery Fund (TEDIX) and the Templeton Global Bond Fund (TGBAX). The Templeton Growth Fund, says Jones, has a robust international component to it.
