Franklin Resources (BEN) 1 Nov 222022 Q4 Earnings call transcript

Welcome to the Franklin Resources Earnings Conference Call for the Quarter and Fiscal Year ended September 30, 2022. My name is Candy, and I will be your operator for today's call.

As a reminder, this conference call is being recorded. And at this time, all participants are in a listen-only mode. I would now like to turn the conference over to your host, Selene Oh, Head of Investor Relations of Franklin Resources, you may now begin.

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

Thank us joining and you you, today fourth and year to XXXX Hello, Selene. quarter thank Templeton's results. fiscal Franklin for everyone, discuss

Spector, CFO This As of month, usual, call. anniversary our celebrate are Nicholls, we the Global as Matt and officially and our our joining on company. Distribution, XXth Head also me a Adam COO;

financial from Our of of XXXX, of values in founded on important active lives. clients millions investment we advice, management their the countries. helping modest more managers. transformed beginnings was largest people into the we with world's most of have and Since achieve than today, partner firm investment the milestones one XXX And

equity around long-term with and our correlated to and our significant on pleased to we in our years, markets. organization commitment shareholders key to global channels. and made proud we needs evolve our that good XX say and maintained of executing the have in further deepening our macroeconomic expanding have always markets resulted to we geopolitical declines plan in in changed volatility meet and diversifying progress say are Since the presence has and this, investment fixed capabilities much of have a we Consistent uncertainty and income Although in XXXX history and fiscal both I'm innovation, globe. clients by January, business our our

assets unprecedented conditions Our by management and impacted industry-wide were flows under pressures. these and

we However, mix providing been managers conditions, net Institute. offset to flow notwithstanding pressures, continued of investor the all investment with alternative of navigate This income expanded leadership and by from equities Templeton and asset interest net them in market help including by our and insights our latest generated outflows outflows thought We various diversified clients year, in the having drawing always, increased Franklin as engaging and have in steep reduced classes. upon and categories in benefited actively the fiscal fixed resources the inflows a assets multi-asset declines. and specialist

asset investment terms our point across and are than Starting In more any history at client progress, with regions in classes. asset vehicles. type, of diversified our we classes,

We continue offer source an increasing of which client to can thoughtfully expand our and returns. are alternative superior investment demand capabilities,

our of of an Just Franklin today, alternative XX% Alcentra, a $XX and percentage largest assets. $XXX September managed assets billion XX, for of alternative the Templeton and even assets. we account managers one Pro makes forma alternatives, these This managed billion AUM or about years as of higher adjusted in for we few revenues. ago, of approximately

managers. largest expand under billion, of our assets credit closing, private Alcentra, to Alcentra schedule. Advisors, Partners. hedge acquisition completion estate debt and and with with with capital Alcentra with We Venture Clarion funds now of meaningful the Speaking into our and Partners portion Partners, today KX we capabilities nearly alternative And doubled one categories, European ahead alternative key we this and of credit Europe. equity were with have excited the with to Lexington of is announce management Franklin of a $XX the including Benefit private venture Partners, credit our alternative secondary Street real

inflows For liquid net year, including were outflows strategies. alternative fiscal in alternative billion, $X.X the

managers, three each is democratization individual net the approximately the BSP, Lexington investors class, of institutions. opportunity private Our are compared in tremendous alternative allocated of markets Clarion billion. had a and largest to $XX positive There to combined flows total as when with under asset

Over wealth focused the in past have sales and suitability, management. product year, alternatives of client we development and the on education and marketing distribution in

product side, interval its fund. recently the On multi-strategy launched first BSP

Development alternative on Estate offer direct Fund alternative Real effort our and fintech of Income two platforms investors investment private resources, Again, specialist a managers distribution diversification more benefit to we to Corporation, alternatives Partners this regard, this BSP Business is access enable financial Clarion on-boarded dedicated Corporation, Franklin Capital part to strategies. of and complement from channels. a all Additionally, that created within covers broader individuals. private have management our that other to were In focused markets wealth and advisers team institutional

from benefit of adjustable in fixed to investors range Franklin approach market in conditions and strategies. the diversified, addition year of $X.X interest category, changing our an In multi-asset asset to Europe. net to and equity Fund a strategies, due multi-asset our the alternative flagship generated being is income, that Income we In has broad Asia billion also which from within increased flows

with represented institutions. Furthermore, our private ago, less than our all individuals flows. strategies prior customized. outflows a equity consecutive and strategies, long-term years array client business equity infrastructure, philosophies, retail is net in expand the growth the Core range business US into positive highly flows from including benefited from investment and equity positive across by We International Notwithstanding income. year, fixed diverse XX% generated Fiduciary management eighth improved and flows non-correlated markets, with approximately in quarter positive a we continue mix. and cap pressure of of a emerging our including income net income. XX% balanced Today, to XX% From broad investors its wealth sector, with of to net Trust particular, intermediate income, asset Turning fixed XX% of perspective, three net

implement model that distribution focused Our firm decision-making a has efforts is and regionally results. and shifted is clients our closer also to our diversified by resources to geography yielding

a our outflows have we APAC reduction example, long-term decrease turned an region. and significant long-term in our from flows net For long-term XX% in including a EMEA the seen improvement in net outflows year. business, was net positive, there prior non-US in

diversification by investment to Turning vehicle.

on build in our to clients' for and particular. expertise are the continue delivering in industry we seeing large, ETFs investment choice. We to strengths of SMAs Similar through vehicles strong demand our at investment

platform, billion is we excess we in We billion, positive in to flows position SMAs O'Shaughnessy ETF by And leading this Management since indexing year, acquisition. continue with with positive $XX franchise AUM Asset enhanced are and $XXX net a of custom flows. our assets. and Canvas, Today, its have our acquiring in net

to evolution that XX% refreshed technology platform incubator successfully campaign a continues have SMA wealth in our venture another ETF with Our industry differentiated in We XX two January, XX area digital we ways and campaign well fintech reflects and from companies, launched of of minority This years. in tokenized funds. we now focus. innovative the in approximately Highlights the client view clients investments globally second The relationships capital In to strategies. of introduce to securities private In strategies. The mutual increased is four opened our actively to managed corporate be the separate distribution we in meet year, firm made and/or fund to the investments expand AUM firms of Hello a launched Singapore digital the as we first world's technology assets access early-stage Templeton. the needs. Franklin have trusted reinforced as to June, finding asset individuals. breadth our commitment US built registered for with of Progress

will initiatives our key growth teams. Looking that alternative benefit management all to areas investment we forward, geographies, invest distribution purposely technology, continue in including across and wealth customization, assets, of all

this and course, year without Of efforts be the dedication of hard leadership our much which very appreciate. would our past and none team possible our I of of employees, work fiscal

like over Matt? I'd the to quarter year. review from to the Now will who and fiscal Matt our and COO, CFO turn financial results Nicholls, our call

declined which performance to and X% by to due billion billion depreciation AUM outflows long-term fees prior trillion, from billion. a from billion, Thanks, slightly market Jenny. ending revenues to increased to management decreased $XX of $XXX.X X% of quarter. Fourth AUM, million quarter excluding of to decline the $X.X Adjusted $X.XX both and the were distributions decreased primarily $X.X quarter lower quarter, compared average prior million, X% prior Adjusted fees, quarter. $XXX.X was fees, from Reinvested the X% the due performance this investment reflecting prior quarter. in $XX.X net

benefits quarter's quarter. adjusted effective increase from $X to prior was higher Adjusted adjusted compared adjusted operating earnings Adjusted tax to XX.X margin as decreased operating was prior offset per $X.XX in of were which declined compensation per in prior fee effective The points prior in XX.X%. by XX.X% This a excludes net XX.X share G&A, $X.XX income by which million fees, timing the quarter with shift a and of slightly basis closing the line the performance of Lower Partners. quarter. mix basis points in was AUM fee quarter result and rate Lexington the the in at billion. of million, to XX% lower diluted to an episodic the $XXX.X from million the X% and benefiting from expenses Fourth share, income operating expenses. quarter adjusted rate quarter and declined $XXX.X included and rate,

year, XXXX and primarily year from reflecting billion fiscal to increase declined distributions by results. AUM XX% of net prior due prior to an market depreciation of from $XX year. Reinvested long-term were $XXX the billion. XX% outflows Turning $XX.X billion, of Ending the

which improved performance performance from have year X% billion expenses our compensation, prior savings. an expense of of partially declined inflows acquisitions lower and year increased the Adjusted been While the prior months Lexington offset XX% fee of the X% six including $X.X operating increased year. increased long-term fees, in the billion, this from revenues increase by outflows prior benefiting environment, risk-off offset and AUM, by from from long-term challenged Adjusted average impact by X%. were $X.X of

Lexington operating prior by XXX expenses decrease X%. of year. six to Excluding compensation basis a the points XX.X%, adjusted Adjusted was decreased operating margin income $X.X adjusted of performance prior fiscal of from This led impact billion, from year. fee operating of the the X% and months lower year

income prior and adjusted adjusted by declined $X.X a net Lexington fees, six income performance XX%. fiscal X% diluted of performance also months X% year impact billion, of share $X.XX, compensation the earnings operating to decline. the was fee Excluding adjusted Compared to year, per decreased

year of through our follows $X.XX market quarter As or we initiative a technology returned reminder, This in administration function, approximately other and strengthened outsourcing year the acquisitions foundation included Amongst capital other were the $XXX able Lexington outsourced business and billion perspective, of fiscal business prudent year our benefit year, the the and of global shareholders and $XXX repurchases investments investments share Partners the with ended tax management our minority fund our challenging a and close last capital expense and million dividends per Reflecting during and of share. From previously measures, announced Management, one-time we both certain we to simplifying several to of O'Shaughnessy a transfer expenditures. the future functions. with agency while our make disciplined earlier. cash management. million reducing fourth of conditions, $X.X level Asset

objectives We dividend, grants to to reach targeted share our and hedge an our prioritize accelerated at continue pace. acquisitions will employee shares purchase our to review

aggregate vehicles growth alternative have for sources generate mentioned, our has diversified in strategies of of to context, significant flow As to revenue, approximately this In potential diversification geographies cash been new and management to performance a $X.X fees. anticipated our goals asset in clients Alcentra added capabilities, closing in more with acquisitions long-term led of diversified shareholders. have we income investment also annual deliver which corporate This choice. driven of in more range our are further and by to fee excluding and billion Jenny the

global support global partnerships, reach, experience collaboration model of create highly business a talented scale we're attract flexibility, investment to teams financial execution, new local on growth and looking and our for independence, Given in opportunities. to and combination and able a

to well the open up to in capitalize And Question-and-Answer would Looking potential like the strategic ahead, activity now Session we these your questions. on us position factors sector. Operator? for call

Siegenthaler Craig you. Our America. line Bank [Operator Thank first comes of of Instructions] question from the of

ahead. line now Please open. is Your go

Hey good you're morning, well. all everyone. Hope doing

morning. Good

also interested growth. this this was on the investment I and fundraising just my and and but performance has how trended performance deal growth organic organic Alcentra's how has I is also question So closed, know to the see trended in XXXX? year investment overall

Good morning. Craig.

best a the glad think, closing good. ahead very couple by schedule mentioned, I on I quite of business an look, in happy We're as describe So we the I to the now at think closing least, going just execution And announced that for it marketing together the months. our future. be today, on. with think, to with Performance from we're to you to be is are the growth opportunity very teams here is team. turning We're emphasis mode quickly way

can So I so we comment think that's all far.

And I get I one Great. or if a Matthew, forget here? two do follow-up? it's

go ahead, Craig. Yeah. Please

next active a liabilities very one My of of future given Perfect. right. All M&A. on is period kind

what the us look terms items you've remind like liability Just few from already the like of next earn-outs years in announced? acquisitions

Yes.

of deferred on years. that previously over payments So due we have the announced about next are $X.X billion acquisitions four

of the $X.X also We debt five over billion due have next years.

Great. Thank you, Matthew.

you. Thank

Thank you.

the from line Bill Our Suisse. Katz of question next of Credit comes

Your open. line is now ahead. go Please

congrats that. if XX the I years, math so on correctly, for diamonds I think did Jenny,

you. Thank

release expenses. sort So to of, on the question sort you'll information put expenses. or press in there, just think how supplement, the of some in normally about Matt,

lot you and think a outlook you are New jumping how don't quarter if Year, fiscal normalize sense base the we about off on. you point, the Given should or that about fourth just think some expense got through, And Can maybe give got XXXX? fiscal -- excuse need going us how quarter to the -- the for we deals. me, you a to mind. as how think Revenues down, whether fourth a to

you, Yes. Bill. Thank

markets with adding down. of are revenue So yes, from we obviously, or to usually Alcentra percentages first that's of go difficult to don't that revenues where portion you today. we're to where point know, up front all, obviously, And we predict respect as because make large guidance heading. give on the it's of a the want -- But, just

our $XX shift overall expect that's to also last of mix to add quarter it today. So because rate that back about in roughly to other effective AUM under that the as increase was in fee billion management of next to our happen and I'd where the we quarter. to

So XXs. let's the say, mid

terms expenses, line it's be for of expenses, an in quarter, quarter the different terms so as early, items, of the In trying I'll try And XXXX. this but in guidance I'll of And modeling. terms is possible the just performance annual for first through then and fees. know go give also very helpful first excluding as to obviously, our I view

assumes does the reported, the benefits which to quarter quarter deferred quarter. So starting two first with comp $XX the million. and let's say. quarter it of expect flat first comp inclusive $XXX quarter around fees that fourth adjustment, But this benefits an it also to to million note of XXXX includes approximately be and Alcentra, fourth months again, comp, we'd XXXX, for would IS&T, annual of just is And we for $XX this to of to quarter so accelerated we the Alcentra, include quarter of expect Two, million XXXX, performance the XXXX. flat that, and be that essentially

$XX reflects the of inclusive For we and of office. quarter normalization more to includes this Again, TA a first expect approximately also for fees. This a be $XXX would placement we about XXXX. higher elevated one-time Alcentra, million. this G&A, and to international million, first fee quarter outsourcing that increase occupancy, to to return

to high also in is at activity would levels. of in we Following to the G&A more this this likely noting, as but XXXs, back continued mid- inclusive future and higher G&A to the fees. expect occurrence T&E, also placement quarters, guidance the are includes normalized higher Alcentra of worth go that It's though, approximately returns XXXX quarter we where for quarter, fourth to

quarter the was -- It's around million, our around quarter, probably of was to that XXXX, to put expect we just in $XX forward. in to now into million going to context, the million. it T&E $XX $X So million $XX second that give and rise fourth

then for expect to the elevated usually as year which outlined quarter, for tax be it the to XX% commentary is rate XX%. executive the XX%, to and We be the we've in for

performance year including this but of this the six obviously, early, fees, helpful terms Remember, we but only year, very full again, In it Lexington. the months say, of might last would we excluding year, was that Lexington. is of be thought

adds full we months of months Alcentra so to year Lexington, today. So and XXXX XX closed another months be as will XX six

XX So it's another months.

that of or additional expense around an that's So an something nature. million $XXX

we the Alcentra. a that come performance additional Excluding billion months additional very year be all -- six absorbing fees, expect expenses of around to an $X.XX or with flat But expenses to billion, to really the XX so our $X months full XXXX. almost of of full again, Lexington in expenses for

maybe you, thank then, Matthew. helpful, Jenny, very for And one That's you.

the you of US doing democratization globally Just things increase set major on Can you the see the in number in penetration distribution terms your are maybe market you -- able where of both you terms where today wirehouses, and opportunity? level you're off to partners a side. and maybe more some of be might of share in or listed retail just sort just

I talked it's the complicated not say, as a lot as it's I'd just Yes. of on mean There's getting platform. about as about, we education. far

So we've couple done a of things.

then the sort up actually fund. has launched platforms. the Reef due different on several large in interval the they product now, with good the actually diligence has -- of distributors, have until group they'll front, that – to be a So all focused wholesaler, staffed able be background is right? with -- have a pulled support a channel the We focused completely channel on in now areas. in traction. our multi-strat created and wealth they had and we're it's alternative to And can CP smaller a BSP And specialists, on has separate of

the able a have size of certain to to larger to platforms. have on be amount get You

And and were in iCapital so the partnered from and capital which one important. it's those diligence of we with and they're are calls. doing of both their paperwork complicated there. – platforms, listed actually the of process advisers the so financial CAIS on the I top due really comments attended conferences to the both do then the And were

both so improved in And to that and important it's Case are really is that, iCapital that. trying tackle

are to have one where We we're So, both and start, products influence the now you're those with and listed as feel then progress more expand the to those good our on of getting, it's -- we of very that able more on -- -- they platforms. platforms.

we So, due are inflection them. diligence their the point doing at we're on feel like where distributors now big that

Thank you.

Bill. Thanks

Thank you.

of comes UBS. next question Our from the line of Hawken Brennan

ahead. Your go line open, is please now

Good morning. stand Thanks like? for Are taking spoken the opportunity have compared that the to those capabilities US? primarily the institutional channel and set in my the questions. does in the Europe you, Alcentra on so side? And where On of retail strengths. What's penetration to their past, distribution

Sure.

Alcentra is I operate occurring think seeing adoption the to of that significant what every globally the We penetration institutional And a runs the are is Latin we that America. a the in have we in in between region to European-based in we're more we're a Alta, that in of there Asia, so we EMEA. is see got and portfolio think best about US, as the going it world-class telling Jenny see everywhere Alcentra based think team the make shot product, We the that of as a portion on in we said, their right and then in. it that where Because lot run. in of we've of that efforts have world. the what general a increasing think We the same largely ease and salesforce wealth really lot presence. extent education we doing way investment they also We're going of the our we're the now. story teams is boost add be as to management that we're market that way. there's that's putting brand; that access well retail specialists to works success sure the to distribution And specialist short

but just still was we're today, announced transaction now. the of we're that on that, executing on early Given in it working some

Thanks.

asset investment organic specialist just space Each in of in I'll couple that growth based of had rate and base. our performance Adam's a activity on attractive profile to we've remarks. managers an add acquired And institutional has historical the points client alternative

the as already there's embedded growth rate so And acquire we firms. that

potential talks So, on is that future the that about. of Adam top

will, you boosted, Franklin tied that believe So, business. we very to with The of additional the more interesting And the wealth as we of on there investment a natural we the the management mentioned, specialist They're the the rates sort can channels. of Adam our rate some build then are out, institutional targets that institutional will acquisition where asset of expect growth to organic broader same. which alternative are side, complete embedded side institutionally-focused all opportunities leverage. look that at exactly growth of the in channels if managers be

I'm more tell having region. team And I net important always There's -- can it when country bias credit, going was you, they're on people just one a capability. have distribution -- the And of And that that expand the just this thing positive home local really that. flows making to credit in to the private add investments. excitement by EMEA we're in

we're optimistic there. So

Great.

Thanks a lot.

And are the excited about how is all. final thing we

hit one. Yes, a here I go. live wire with we this

we where every our benefit and and are one We’re supplementing FT focused relationships alternative. firms. of seeing of that but Each and institutionally we're has long-standing is we distribution, firms our going each particular historically strength with on alts that have

it. Got

Sorry, ST.

Franklin Templeton.

Templeton. Franklin Correct.

Templeton. Yes, Franklin yes. Got it.

Sorry, obvious. that's yes, -- that's

transit the into Thanks to a maybe expenses. Okay. for more color. mundane I'd love Really all on appreciate that. topic thorough of

so, know caveated And you days whatnot. and -- the early Matthew, about thinking right, I it,

X much is to very is through down year through us the uplift have to what And Alcentra. as your But T&E. adding an for inflationary helped very, Alcentra X.XX in environment into expectation this to you've continue sort to much wiggle that environment. do you it's order work we And room the how challenging obviously, You quantify of got an base? how that that -- grind

Brennan. Thanks, Yes.

I absorb And all other expect mean we base. that absorb that finding our cut to it, on Franklin with By of cost as places attractive Alcentra, don't so And approximately we're given it's million. an into difficult market expense I base more conditions. to mentioned, up be very within the Templeton we it. efficient $XXX So end

So over in we that costs to cutting just the We're in clear. make I company not London acquired. want

this matter other to we more where So platform. how find can can -- places is across be this where efficient scale is the

adjusted I comes focused think to do base to I'll new with is at XX% just to is I of of is what bit you're the a focused, very sort important sort Jenny be to the back getting our way it me And of of also we think roles things. in expect margin. margin but couple to the up. down of XX% XX%. in do the variable before go a market, expense little point very asked other we're to here, a on one XX% this my

time. competitive right now, important sure of up given in any where It at and with evolution our is investing making more extremely investing keep the while industry down that though important of, this probably the even market sort to XX% terms to is we But do time of In facing. we that keep remain of is XX% than with takes change would, considered in business, the to it in So the for, are other compensation truly the industry interesting declines carefully explore. revenue with up is sharp to call the magnitude, areas the have variable it, I heading. things adjustments business marketing performance, in

of in operational to taking -- process That's, spanner efficiencies action, such we fair and to already plans as like way we've hiring. view, our across or We're investment pausing a headcount our buyout, additional announced are execution we taken effective things However, introduce firm, the in very have and layering. voluntary a staff. downsize the which excludes nonessential and have control,

and And going all levels. from extremely firm this in to call meaningful that tech areas these invest we and the mundane, the think the And things in up past merger I strategically core -- are it addition keep we right. expenses this by our savings the able transaction, in very get just to the things you'll it's that simplifies growth. are our the reduce company of also our in from You in outsource. a And by prepared -- hopefully, operational to to three environment. efficiencies think enabled doing be even even And the in SMA this demonstrated already this as market importantly, do our deteriorated, investing this to years markets by us benefited outsourced talking as in about to for size, important few difficult corporate it to a funds, be continue we've most when result time to over fund to not we about. various spend ability but capital active the up, in discipline, it's of we've our have perspective. frankly, created But made mentioned remarks, lot us quite business my activities, years, see I our capital as operating so expenditures in And importantly, output customization, our way decisions we've future last shareholders all lowering from frankly, alternatives, operations is lowered not to but it's that's having future our continue a of our wealth distribution, the

the Thanks all for color.

Brennan. Thanks

you. Thank

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

ahead. Please go Your now line open. is

good for hi Rick morning. Dan. This actually is Yeah, Roy on

income, given the the for historically just we've of the fixed your peers to potential the several seen. thinking beneficial just highlighted for fixed year, allocations set macro income increased have that coming about setup in So

share are set then in income performance product to maybe do to also as just helpful. franchise winner visible as adding So any you of that, fixed with ones And color at environment? Brandywine the them certain on Franklin us, a the this the flagship legacy be Western products least see the Western and or that loser on that would

Adam, you want? do

the for question. across to about Right in all yield we're Thanks opportunity income investors. offer the the for fixed has to now, sectors. thrilled finally value embedded Yeah, fixed income more

of XX XXX that about income XX-year are investors three, and have composites and those the we one, periods. We fixed offer outperforming five on can

categories. income global credit the Plus wins the income we tremendously and that to Plus fixed attractive growth effectively in pressure performance, continue. under excited the were of So year. we're shorter curve and and we're at of there. Despite very healthy products Core multi-sector in biggest for fixed some are and we're our end to seen Core of is a range what with able products Core compete significant sales we've and seeing Core Western But that have this pipeline Core obviously really absolute in

a year tough spots, board. in good income some a lineup So really but the performance in across fixed

thing to year able securities multi-asset this able to with we've equity to without is income income that infrastructure duration. other pivot fixed fund, income things to strategies, and income like produce out of how do income our The effectively income been class

about rates, traditional within So of extent worried people to demand are that are we exciting, fixed are and the but income, investors. a have seeing things range still opportunities, that rising we increased other from

has around at then the Got obviously, it. extra the somewhat may, quarters I performance elevated the that. fees, last least. And been if just on Appreciate context two

are now that we and AUM below how sits might think So Alcentra any eligible and watermarks. with where about the mix currently, high what in assets performance obviously, fee

of going idea an get next into year? to Just

that I and than $XX returns or payout. given, guidance million previous about increasing the clients Yes. call, I this the from strong we had around about taking off is that fees another fourth performance or of performance fee on table so, our changed we've our realize we from on quarter fees triggered an accelerated say was talked just which this. think guidance don't have I'd we But or rebalancing performance quarter million. higher the $XX the

above were we what this we be except at rebalancing. acceleration far through think for don't I suggested, So too we'd

the performance, the terms our highlighted assets with the performance under our is to linked or been billion. management much of it's in remarks, what in very our which full – that In fees line $XXX has in AUM

in get performance is if fees, strong very of rebalancing we the $XX for it's be that they a we're those say, higher guidance for performance above related business from there's in Not that's It we're in but of we right of fee. Of I not management fees, you investment let's confidence think threshold future all large very said, for it know. extremely rebalancing. and will asset is stay assets again, so fees. million quarterly, is course, $XX modeling mean purposes the other performance hard annual. performance – all in to But significant. just And it's fees under that performance to I But as doesn't some alternative far performance not specialist of The million potential our is strong But the a rebalancing, provided, number. the some guidance very our our our across is would very performance that produced for managers. the has

so much. it. Appreciate Thanks

Thanks.

Thank you.

Our ahead. Please next the JP of question Morgan. go comes from Worthington of Ken line

and of maintain investing it and in to Hi. continue the decrease to investing Cho efforts the diversify morning, alts would guess, in the I look we I was than This even and pace of ever. the I in Good even up I and Matt, business more fintech in question into that on framework the about guess business – your just you Michael would everyone. is to your for follow seems is, And wealth also XXXX. or intention just as about my go be or terms investment XXXX talked of business when think wanted Ken. terms important we your intention back, guess increase to diversify provided.

where in the in the investing business substantially we we're because -- very have XXXX future. opportunities increasing substantial of there's very income grow in the future, we that in terms to today that we think in define operating In if basically expect little you areas

investment to that I'll ask you. area. we if our in Jenny So increase intend

misunderstood see we've you'll of the various of areas have. the I lineup question. performance still of we and I I our I But that. Maybe manager. we've, here's been talked Yes, acquisitions think investment that to traditional impact alternative managers our view of from just how have And is, compare think globalizing if on the things you of -- think think, traditional fees, the like pretty about infrastructure we standpoint. gaps, clear some about any then asset have capabilities managers, And broadest we types we other

came be if interested. those so we'd opportunities And up,

areas other we've increasing The talked about distribution. that is

increase as help distribution well that us channel. our of So, any as kind investments capability wealth the

We right three and big still say bar other acquisitions. if would currently. has keep that -- available that is some the because we're on founder really that we flexibility. look we're we lineup going up, very have hand higher But we So, at. the something be we always a because happy to and be involvement we're now company those is and digesting comes are picky the have opportunistic because this feel has the that also think been XX we We But I of product a around for that that with want to cash years.

I one strategy this think and just our I is priority, that clearly internally. Jenny organic emphasize just Yes. mentioned growth number

are yes. So, increasing the answer investments The question the organically? -- have you we is dollar had around

increasing are We those.

is after investments level we've our investments. we year is of four mentioned, very $X.X which cash of made to the certainly way. M&A, guidance acquisitions investments the cash as Jenny roughly forward of mentioned time make on. That's Jenny continue to look other and are We when the to this possible have remarks, exactly acquisitions, investments, terms activity to But we and in we sheet any around level prepared also is when interest balance targeted provided, about -- that through these of last the billion mentioned, bar have things so income, you to In think made higher last have make minority in and of now, our organic with course, the think waned in not flow I but operating and as you. But business, year, some which, the important I and other a lot still just room in two of the important. we

have investments, give really Alternatives Templeton to newly guidance. kind on alternatives, that I distributing with some all Franklin that's Group wealth and we've the the -- Matt's to But incorporated and expertise color into a in the just organic of and mean are investment can And is staffed profitable investments advisers, and that other not channel are them, on continue substantial those their leveraged in as to as constantly but you invest. profitable be FinTech tools well you there to in capabilities when have financial own, invest we they're add these models by you set up the to pretty

incorporated is earnings that guidance. of in All our

Okay, you. great. Thank

Thank you.

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

Your open, go ahead. please line is now

compelling with to you to Maybe the might set at maybe take the Alcentra. back coming about morning. help to talk in accelerate there them Good Thanks. Alcentra opportunity from actions you growth where you talk growth? accelerate Great. can you could what that see distribution most And Alcentra, retail just Is Europe? about

absolutely. Yeah,

the a is first standalone, own. and We've have they've to think their quality EMEA team they the footprint thing them think met well. state we quite I high we we on got said, that want huge being recently, can in really That a do with region.

said, some European capabilities can seen home more we private our retail a all credit. of there's we've distribute and investors, EMEA for bias, what in alternative that to to bias with be As based find Jenny that there try other And we market a home is significant desire institutional.

focusing can footprint be fewer where an is rising FT earlier the a one going would So will Alt their I note up are capabilities. ground in our strong The while say XX where being in presence significantly. and of making at play where education, final we added give placement to managers significant us to that a think on management areas at it that are most really helps in There, player wealth region the the there. on that that is take easier major channel, have over think the I markets. our of thing more in there's leg the think I markets, is I we on That's allocations the institutional focusing assets where would we greenfield.

relationships. markets place distribution. So to and those where smaller in get our alternative where some have firms own, on significant of can their really might the we boost we not That's

the as investment already a globalizing important note think add additional this transaction would fact is the DSP. I specialist to it's to Adam's one thing manager think I in comments described we is we I that have that

take Obviously, do business that bar the mentioned thing we frankly the build have do point too becoming reasons that long position Jenny So the us helps we in is we're our global acquired view, in for globalizing retention that a compelling was these a it area. -- credibility And and to with taken why That with Alcentra ourselves? part we strategic ourselves formation. always high. with thought to helps this interesting business. this go the ask we and And more are It And Can or even around a leadership fundraising, as is investors, being a why opposed something largely of to origination. second was there place Alcentra We ideas, talent. just strategy and too talent large this it a some long get organically? European a first a business. just both frankly become can US would things the to another BSP helps team particular that of and And ourselves. one and very we gain

and help that team Alcentra delighted outstanding to we're leadership. to acquire globalize So PSP for also

bring an on that. the process access look timing able and What's and that to And like Great. come blockchain. the I just for more you How the may to wanted use registered was institution the hoping to individual to money as follow-up or the elaborate Maybe that benefits a Jenny, I be could marketplace? question. that fund there? you to to fund you back see cited guys that

Yeah.

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that records on will Act XX books and that will shareholders' traditional And in mutual a tokenized the over all you believer expressed records. So like there. That things see funds. impact are ETFs an funds have and I'm time

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marketplace it, And firms important going to we are to there. it. understand to is So over we because wanted to that's think this talking space we did about an time, that and the leverage happen we how

so but a will hold to have that part you that valuable crypto be it it's isn't as your if wallet, time. today, infrastructure to of You tokens those a over distributor, in not

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you. Thank Great.

Thank you.

comes the of line question our So Brian of Bank. next Bedell from Deutsche

line go ahead. now is open. Your Please,

morning, Good folks. much. very Thanks

dollar do you First fiscal for have we've the used expenses on one that just this a the amount know year? adjusted a formula amount XXXX for clarification typically, but -- excluding Matthew, fees. performance I for precise

XXXX, You mean Brian?

the no. the No, XXXX, actual performance -- expenses, fee compensation. so excluding adjusted

All right.

so it's $X.XX the year, of billion -- yes, the around For end

X.XX.

our remember, guided the of about to call, on we may and I guidance. we'd then end of you -- last as be X.X% as the inside we're guided that said in so $XX we -- X.XX% -- lower to That, million you actually

dedicated more realize, in have just if Okay. X on maybe I little the reclassifications, accelerate Maybe and of happening throughout us products. bar give AUM objective. you that raise may of Jenny, what's the on sustainable X investment or sustainable Franklin. you Article course, with Article can not have investment just your firm. more ask those as products products and across can to trying out going your ESG a dedicated I the primary Europe sort hurdles. sort an they're to the the Adam, utilized view disciplined I'm going those of And is think if that But bit actual to to be that's or get an what clear update get you Perfect. on And on Great. of or if process view in then, the you Jenny, at update

I at X, and think it ESG is good actually Article I looking it. pretty the of So, X, way X think to Article kind the of job framework actually the a because defining do they European with actually -- describe

probably around see following the it, it. think will the concepts Asia You model and US I

in have flows billion strategies We XX initial positive I $XX we Article X were and So there. and about very think, conservative, evaluation. and X our in

quite active compliance determining categorized be would in X. in what group was X, Our those X,

So we feel about that. very good

your how see that I going most the it think to you see regulators document US, us credit you and it show you're around you to and document don't give is, doing, you're doing transparency in more it say doing if process requirement and we're going you Europe actually not are us what you're only saying, see whatever for in you that say to you show you're it.

almost there. like and you're kind will different documentation blended, measurements to risk I of is think of gut these stewardship company should it's about measure with that Again, things. time, XXXX was the externalities. there be often do that you start risk One a think ESG considerations to And there all a code. two recognition couple You it I see for my then feel the the is get is, over that. to of just underlying portfolios going that UK

fiduciaries. we're progression. natural by that's I that, I way, a oh, think And then So think that recognition a there's the

in you the think this, Stewardship returns you all that X. UK And Stewardship as part and so measurement And capture in need to that be the I has of Code, to the well. Code consider of

here stay. it's to So I think

I and we're we asset are will better it's again time data over I all transparency and that remembering asset owners. managers, better then and fiduciaries of evolution natural a and not just remind that think

things, So educate as and far we discretion but end, desires, we as of money. are talk our their their it's at on the and the clients them in

you. Thank Great.

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

employees once dedicated we quarter. on to to fiscal again for of would participating work and our I this Well, want Great. in our thank call. to and focused all you. speaking year forward past I like they Thank today’s to everybody thank again, next laser look are clients, just And hard for you their

Thank concludes you. today's This conference.

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