Franklin Resources Inc. (Franklin Templeton Investments)

Business Ben would be proud of

Industrious like Ben Franklin himself, Franklin Resources, which operates under the Franklin Templeton Investments name, is the largest publicly traded mutual fund company in the world. As of June 2009, it had approximately $451 billion in assets under management.  Its more than 100 mutual funds are invested in stocks at home and abroad and overseen by Franklin Resources' 8,875 employees operating in nearly 30 countries.  The San Mateo, Calif.-based firm was founded more than 50 years ago in 1947 by Rupert S. Johnson Sr. Originally, the firm specialized in conservatively managed mutual funds. Its conservative Franklin Income Fund, for one, was created in 1948 and has paid investors uninterrupted dividends for 55 years.  Its other notable funds include the Templeton Growth Fund, the Mutual Shares fund and the Mutual Discovery fund. Today, the firm operates mainly in two segments: its investment management and related services segment and its banking and finance segment.  Through its investment management arm, Franklin's advisors provide investment and fund administration services, as well as shareholder services, transfer agency, underwriting, distribution, custodial, trustee and other fiduciary services to companies and individuals alike.  The banking and finance arm provides retail-banking and consumer-lending services, including securitization, consumer credit and debit cards, real estate equity lines, and home equity and mortgage lending.

Franklin's clients,  that hail from the U.S., Canada, the Bahamas, Europe, Asia, South America, Africa and Australia, are serviced via the Franklin, Templeton, Mutual Series, Bissett and Fiduciary Trust brands.  Franklin Resources' growth has largely been bolstered through a series of strategic mergers and acquisitions.  By 1971, Franklin Resources had grown large enough to go public.  After acquiring San Francisco-based Winfield & Co., an investment management company., the firm moved its operations to San Mateo, Calif.  In October 1992, Franklin Resources purchased Templeton, Galbraith & Hansberger Ltd., which managed and operated the fifty-year-old Templeton Family of Funds. Templeton, due to the counseling system and detailed security analysis cultivated by founder Sir John Templeton, was known at the time as one of the best undervalued stock-pickers.

By the late 1990s, Franklin Resources had grown so large it had its fingers in markets across the world.  But its fingers got burned in Asia, when the 1997 financial crisis rippled across east and Southeast Asia.  A year after the market crashed in Thailand, which triggered the crisis, Franklin Resources' income had dropped to $68 million, down from $130 million in 1997.  In 1999, the company was forced to lay off 7 percent of its workforce, sending out 560 pink slips.  Most of the cuts were made in areas of the company like clerical operations and no investment-management jobs were lost.

In 2000, Franklin Resources' funds rebounded, with six of its funds in the series beating the Standard and Poor's 500 Index, the first time the entire series performed that well since 1994. The good run didn't last for long, though.  Like many of the businesses with offices in the World Trade Center, the terrorist attacks on September 11, 2001 took a physical and financial toll on Franklin Resources.  The offices of Franklin's Fiduciary Trust money-management subsidiary lost 87 employees that day.  Following the attacks, the company's assets under management fell $20 billion in less than a month, from $264.3 billion at the end of August 2001 to $243.9 billion on September 25th, as the world financial markets reeled.

Within two years, Franklin Resources was back on track, launching its Franklin Structured Large Cap Core Equity Fund and the Franklin Structured Large Cap Growth Equity Fund to institutional investors who were looking for limited risk index-based investing.

In July 2005, Franklin Resources' co-CEO and president, Martin Flanagan, left the company to run AMVESCAP, a rival mutual fund company.  Gregory Johnson, Flanagan's counterpart and son of Franklin Chairman Charles Johnson, became the company's sole chief executive, solidifying the Johnson's hold on Franklin Resources.  (The Johnsons own more than one-third of the company.)  Flanagan and Gregory Johnson had taken on the roles of co-CEO only a year earlier when Charles Johnson stepped down as CEO after running the company for 46 years.

Controversial Funds

In 2007, one of Franklin Resources' holdings came under intense scrutiny due to its alleged connection to Sudan.  Though the company in question, PetroChina, claimed that it had no business ties to the war-torn country, human rights activists pressured firms like Franklin to sell their stake in the company because of the actions of its parent company, CNPC, which has admitted they are involved with the Sudanese government for the purpose of business. Franklin Resources has publicly stated that while they support efforts to lessen the ongoing strife in the Darfur region, they refuse to give up PetroChina because their first priority is their fiduciary duty to their shareholders.

Franklin also has a statement on its web site that attempts to quell the controversy surrounding PetroChina by implying that the Chinese company's attention to Sudan may actually help the country's problems. An excerpt from the statement reads, "In our 20 years of experience investing in emerging markets, we have seen that fostering economic and business development through investment can often help in achieving reforms."

Investing in Asia

In October 2007, Franklin significantly expanded its presence in Asia with the launch of 38 new funds in Singapore, bringing its total funds there to 58. This expansion was an attempt to tap into the rapidly growing wealth market in Asia. Stephen Grundlingh, who heads operations of Franklin Templeton in Singapore, predicts that the wealth industry in Singapore will increase by approximately $350 billion over the next 10 years.

Close to 30 of these funds are offered in Singapore dollars, and others are offered in a wide range of currencies. The funds include the Franklin Asian Flex Cap Fund, the Franklin Mutual European Fund and the Franklin Natural Resources Fund. Franklin's international funds have fared very well throughout 2007, with dividends paid out to investors in its Global Income Fund and Emerging Markets Income Fund.

The firm went to the Far East again in February 2008, buying a 49 percent stake in Vietnamese investment firm Vietcombank Fund Management. The terms of the deal were not disclosed but Franklin said in a statement, "We see tremendous opportunity to grow our business by extending our local asset management network to Vietnam." In addition to Singapore, Franklin already had Asian offices in China, India and Japan.



Franklin Resources Inc. (Franklin Templeton Investments)


One Franklin Pkwy.
San Mateo, CA 94403
Phone: (650) 312-2000
Fax: (650) 312-5606
www.franklintempleton.com

STATS


  • Employer Type: Public
  • Stock Symbol: BEN
  • Stock Exchange: NYSE
  • CEO & President: Gregory E. Johnson
  • 2007 Employees: 8,875

Major Office Locations

  • Sacramento, CA
  • San Mateo, CA
  • Fort Lauderdale, FL

Key Financials

  • 2007 Income: $1,770 million
  • 2007 Revenue: $6,200 million

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