Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: How should we think about the core net flow run rate if we back the $14 billion out of the $7 billion of long-term net flows?
A: Jennifer M. Johnson, President and CEO of Franklin Resources, highlighted the company's strategic positioning in four key secular trends that drive acquisition strategy and future flows: movement to alternatives, customization, global distribution, and technological advances. She emphasized the breadth of Franklin Templeton's alternatives capabilities and the growing demand in the wealth channel for alternatives, which could significantly impact flows.
Q: Can you discuss the fixed income flows and whether this is the beginning of a broader trend for fixed income investments?
A: Jennifer M. Johnson noted positive fixed income flows and a strong pipeline, particularly in institutional channels, driven by expectations of rate cuts. She mentioned that the demand is broad-based across various fixed income products, indicating a potentially strong market for fixed income looking ahead.
Q: Regarding the expense dynamics, could you explain the delta in compensation versus guidance and the outlook for expenses?
A: Matthew Nicholls, CFO and COO, explained that the increase in compensation expenses was partly due to higher performance fees and calendar resets in compensation. He provided guidance for future expenses, anticipating a slight increase due to higher market activities but emphasized continued expense discipline.
Q: What is driving the success in fixed income, and where are the assets coming from?
A: Adam Benjamin Spector, EVP and Head of Global Distribution, explained that the success in fixed income is due to a mix of manager switches due to performance, extensions in duration, and new allocations across various fixed income products. He noted that funding comes from diverse sources, including cash, securities, and transitions managed by other managers.
Q: How are you thinking about ETFs outside the U.S., and what growth do you see in international markets?
A: Adam Benjamin Spector discussed the growth of ETFs outside the U.S., particularly in Canada and EMEA. He highlighted the success of single-country ETFs and sustainably oriented products, indicating a strategic focus on expanding ETF offerings internationally.
Q: Could you expand on your comments about being busy in private markets over the next 12 months, particularly in the wealth channel?
A: Jennifer M. Johnson elaborated on Franklin Templeton's activities in private markets, emphasizing the importance of distribution capabilities and educational resources in capturing opportunities in the wealth channel. She mentioned various private market strategies, including real estate debt and venture capital, indicating a comprehensive approach to private market investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
