Franklin Resources' CEO Discusses Q2 2011 Results - Earnings Call Transcript

Apr.29.11 | About: Franklin Resources (BEN)

Franklin Resources (NYSE:BEN)

Q2 2011 Earnings Call

April 28, 2011 4:30 pm ET

Executives

Kenneth Lewis - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Gregory Johnson - Chief Executive Officer, President and Director

Analysts

Craig Siegenthaler - Crédit Suisse AG

William Katz - Citigroup Inc

Michael Kim - Sandler O'Neill & Partners

J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc.

Michael Carrier - Deutsche Bank AG

Douglas Sipkin - Ticonderoga Securities LLC

Kenneth Worthington - JP Morgan Chase & Co

Marc Irizarry - Goldman Sachs Group Inc.

Daniel Fannon - Jefferies & Company, Inc.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

Cynthia Mayer - BofA Merrill Lynch

Roger Freeman - Barclays Capital

Operator

Good afternoon, and welcome to Franklin Resources Second Quarter Earnings Conference Call for the Quarter Ended March 31, 2011. My name is Christine, and I will be your conference operator for today.

Please note that the financial results to be discussed in this conference call are preliminary. Statements made in this conference call regarding Franklin Resources Inc. which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties and other important factors are described in more detail in Franklin's recent filing with the Securities and Exchange Commission, including in the risk factors and MD&A section of Franklin's most recent Form 10-K filing. [Operator Instructions] Now I would like to turn the call over to Mr. Greg Johnson, Chief Executive Officer. You may begin.

Gregory Johnson

Thank you and good afternoon, everyone, and thank you for taking time to join us for this call. Joining me is Ken Lewis, our CFO.

This morning we reported a strong quarter of operating results, sales we're at an all-time high and long-term net new flows improved to $9 billion, due to the continued strength of Global bonds and a pickup in U.S. Equity and Hybrid flows. We did experience some lumpy institutional redemptions during the quarter, but flow trends improved in March. That trend has continued in April, and we continue to see that we're well positioned to benefit from increased investor demand for equities and Hybrid funds. Now I'd like to open it up for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from Roger Freeman from Barclays Capital.

Roger Freeman - Barclays Capital

I guess, just to start with the flows. Looking at domestic equities, $2.4 billion net. I mean, how are -- is there any lumpy institutional inflows, mandates that funded in the quarter there? Because obviously, it's a very strong number. And looking at sort of the same fund, data on the mutual fund side, it would suggest it was a -- that you did get some smaller numbers. So I was wondering if there's anything lumpy in there, if that really is representative of the broad-based market share gains.

Gregory Johnson

There really isn't -- there's not anything lumpy to call out. I mean, I think for us, we talked about some of the efforts around the DCIO platform that it was a record sales month for us there. And the equity funds, especially in the U.S., a few of them had record quarters as well.

Roger Freeman - Barclays Capital

Okay. That's great. And I guess, the follow-up, just around expenses. They came in below what we were looking for sort of based on some of the commentary about -- in 4 years what it was going to look like, and I sense others as well. I mean, can you talk a little bit about how some of that progression pans out over the year vis-à-vis some of the projects you're spending on?

Gregory Johnson

Sure. I guess, just as a follow-up on the previous question, too. There's also strong flows in our SICAV products in the U.K. category it probably doesn't come through in some funds. So the U.S. opportunities fund was our top selling one there for equity funds.

Kenneth Lewis

Yes, it's true that -- particularly the IT and the occupancy expense came in a little under where we're thinking it was going to be, but we continued to spend in those areas, it's just taking a little bit longer for that spend to be reflected in the income statement for, I guess, 2 reasons. One is a lot of the projects that we're working on are capitalized, so you have to wait until its completed and then it will come through in depreciation expense. And two, there have been a lot of efficiencies realized in this fiscal year, particularly due to some strategic decisions we've made on the technology side. For example, bringing the data center in house. We're kind of recognizing some of those savings earlier than we thought. So that's been maybe keeping the expense line static instead of increasing what we thought. But the message is the same. I think over the long term you'll see some, well, not very dramatic, but you you'll see some incremental uptick in those lines going forward.

Operator

The next question comes from Michael Kim from Sandler O'Neill.

Michael Kim - Sandler O'Neill & Partners

First, maybe to just of kind follow-up on the domestic equity flows, can you give us some color around maybe some of the drivers behind this step-up, whether its performance, rising risk appetites more broadly, or maybe it's related to your recent marketing efforts?

Gregory Johnson

I think the answer is probably a little bit all of the above. I mean, we have felt that the performance has been very strong, especially on the Franklin equity side. Franklin Growth Fund has been around a long time. We've just spent, over the last 6 months, pushing hard on those funds and I think obviously the timing is right. And then I think more importantly for the longer-term trend is all of the new platforms that we've introduced those funds to in the last 6 months and the defined contribution tends to be a steadier place to go and that's probably where the battle's won and lost as far as equity funds go. So our metric was getting them on as many platforms over the last year when equities were out of favor. And now when you're see things come back, they're doing very well. And the Franklin Growth fund, the Rising Dividends fund, and then offshore the Franklin U.S. Opportunities fund all had record quarters for the last quarter.

Michael Kim - Sandler O'Neill & Partners

Okay. And then in terms of margins, is it fair to say maybe margins have peaked, at least in the near term, just as you continue to ramp up some investment spending? Or do you still feel like there's some leverage in the model just assuming assets continue to trend higher and maybe the mix improves a little bit?

Gregory Johnson

I think there's some leverage in the model. Obviously, revenue -- time and time again, revenue's the big driver. Even the short quarter this month caused a little bit of the margin compression. But we're going to continue to spend, but it's not -- we're doing it pretty thoughtfully and I think there's room for expansion.

Operator

Your next question comes from Jeff Hopson from Stifel.

J. Jeffrey Hopson - Stifel, Nicolaus & Co., Inc.

Any additional details on the $4.7 billion as far as why that left? Do you know if it went to passive? And then in terms of international equity retail, I guess, on the SICAV side, any change in kind of the products that you're selling there? I know Asia-Pacific growth was a big seller in the previous quarter, but any changes there?

Gregory Johnson

I think, first of all, the large redemptions and the -- were more performance related and it really depends on how you view performance. And if you look at Templeton and with really a value bias if you look at them relative, it's all international equity funds, they were under performing. Now that's turned around dramatically since that decision was made by those sovereign wealth funds to switch over. I'm not sure where the monies went going passive or they're active, but it was performance-related to the Templeton lag. Now that's really over the last 3 months it turned around dramatically. And you could see most of the Templeton funds now are in the top first or second quartile, including the 3-year number that moved quickly. And at that same time we were winning global equity mandates at the same time that, that redemption was made. So I don't think you can draw any conclusions that, that happens. These funds tend to move monies around a little bit quicker than, say, your average. So when you do have downturns and short-term performance, you're vulnerable. As far as the global equity flows go outside of the U.S., you're right, the big driver's been Asian growth and that trailed off during the quarter. And I think the reason there is really the backup in rates and the January effect on emerging markets. And overall, those markets underperformed the overall MSCI during the quarter. And again, those tend to be more short-term performance-related, and I would think that, that would be coming back now.

Operator

The next question comes from Bill Katz from Citigroup.

William Katz - Citigroup Inc

Just wanted to get a little more detail behind the new vision, 2020 Vision campaign. Could you talk a little bit about when you rolled it out? Where you rolled it out geographically? And is there any more opportunity to penetrate other distribution channels with any other regions, et cetera? Any more quantitative feedback beyond the 80,000 fulfillment certificates you sent out so far?

Gregory Johnson

Well, I think we're on to the next phase of that campaign. And it was really designed just to give advisers tools to deal with the move towards fixed income and how much pressure there was to redeem equities and whether it was our fund or somebody else's. We just wanted to create more value in the relationship by having those tools out there and then try to come in and follow up with the Franklin fund. Right now, the push in marketing is global is a new core. And that doesn't mean we're forgetting about U.S., but all the tests and surveys that we've done and trends indicate that there'll be more moving to Global Equities. People are still under-weighted and we wanted to change the thinking. Because again, I think that that's advantageous to us with our overall mix to have Global Equities represent a larger base of individual investors' portfolio.

William Katz - Citigroup Inc

Are there any -- expands the question, are there any opportunities to sort of broaden out that marketing campaign that could add another way of growth on top of what you're doing right now?

Gregory Johnson

Well, hopefully. I mean, that's -- as I said before, I think the equity push is something that we're getting to a new audience. We still think there's a lot of opportunity on the retirement side to get into more plans and as long as performance stays solid there, there's no reason why we can't expand to new markets. And the bigger question is how much can global equities expand. And again, you could talk about this looking at each country, because each country has its own bias to their home investing. Some higher than others and we're really approaching it on a regional and country-by-country basis. So we are rolling it out across the globe.

William Katz - Citigroup Inc

And so my follow-up question is, sort of come back to Martin's from a different way. I think your tax rate is a little bit lower than people were anticipating. I guess that's the mix shift that's underway. I think I ask this question every quarter, so I apologize in advance, but when you think about the profitability by geography, I don't want to ask a leading question here, but is non-U.S. business at this point in time -- I know you run some of the money through the Bahamas, what have you, but is non-U.S. innately more positive or equal in terms of the profit contribution?

Gregory Johnson

Non-U.S., U.S. are approximately even. If you pull away the layers in the non-U.S, there are pockets that are more profitable than the standard U.S. products, but there are also pockets that are not. And maybe they're not because we might just be getting started in an area or the products may be small. So they blend out to a point where I can make the statement that non-U. S., U.S. is about the same profitability today. Just maybe I can touch on the tax rate and the mix question. Sure, part of it was due to the assets that are managed out of low-texture switches like Singapore, Hong Kong and the Bahamas. But also some of it was portfolio-related. So you can see on that slide we did that new chart that showed you that we had some gains, a lot of those gains were outside the U.S. So that changes the earnings mix, too.

Operator

The next question comes from Michael Carrier from Deutsche Bank.

Michael Carrier - Deutsche Bank AG

Just given the longer redemption this quarter than in last quarter, I think it was in Hybrid. Can you give us any color just on the institutional pipeline and maybe you have some of these on the out, but what's coming in and where is the interest?

Gregory Johnson

Well, I think the pipeline looks good. I mean we really don't talk about or try to put out any numbers where you'd be able to guess if any lumpy things are coming in or not or going out. I think the feeling is the trends and again, we talked about the quarters around global equities and whether it's lower duration, emerging market bonds are all very much in place and they're very active and healthy pipeline for us. So hopefully we'll see some good numbers coming in there next quarter.

Michael Carrier - Deutsche Bank AG

Okay. And then on the retail side, it looks like you're definitely seeing a pickup on the domestic equity side and the Hybrid. And then just in terms of interest levels, I guess it makes sense. I mean, you haven't seen a pickup on the international equity, but it looks like there's a focus on the marketing new campaign. And then, I guess, just any update on the muni side just in terms of any increased interest from the advisers or from the retail client.

Gregory Johnson

Well, I think muni, as we've said, will continue to be difficult. I mean, I think they're under pressure every day in the headlines and you certainly have some strategic buyers that come into the market, but just the overall retail buyer that is a dominant player in that marketplace is going to react to what they read about in headlines. And I think the bigger part was the concern that rates are going up and taxes were staying down and not going up quickly. And I think those 2 on a less liquid market had a pretty dramatic impact, coupled with the headlines, and it's hard to separate out what affects it the most. But the bottom line is, we don't see that turning around quickly. It's better -- performance has been better. It was positive for the quarter overall for munis. So that's positive and whether it settles down, I think it should, but you still run that risk of headlines everyday and budgets being battle, and that's just going to put headwind into muni flows. International equity, I mean, the issue, the core strength of our franchise around Franklin -- around the Templeton side has with its larger cap value bias and less energy in material waiting has hurt relative performance. Now the good news today is the dollar's been weak, they don't hedge anything. The move in the last quarter into Europe and other places where they've been overweighted that's hurt performance has helped performance here and helped it dramatically. So that's turned around quickly. It's hard to sell when you're third and fourth quartile. But now that we're back into first and second, hopefully we can see some turn around there quickly on the retail side. And mutual's been steady and positive. And Mutual European and Mutual Discovery continue to be steady as far as inflows go. And again, hopefully that'll continue.

Operator

The next question comes from Ken Worthington from JPMorgan.

Kenneth Worthington - JP Morgan Chase & Co

On the Templeton Global bond and the International bond franchise, I know you've talked about there being no capacity issues there. Are you getting any sense of either owner fatigue or buyer fatigue? The fund performance remains really good, but the net sales peaked last year in kind of the March and June quarters and gross redemption seems to be creeping higher. So any sense of fatigue? And do you think sales number kind of stabilize here or do you think they continue to decline from very strong levels?

Gregory Johnson

Well, I think, as we said, even at the height that it's very hard to maintain those kind of flow numbers, and you have the natural -- the funds growing and aging and you're going to have redemptions that weren't there before, just based on the average life of an investment. So that puts pressure on the overall net number. But I'd looked at -- the story to me is the strength of the Global Total Return fund and how quickly that's grown in $2.5 billion of net inflows into that fund the last quarter. So while you could argue maybe the Global bond has slowed a little bit, but you can certainly say the Global Total Return has become very meaningful, and that's even a bigger market than the Global Bond because it not only has sovereign debt, but has Corporate bonds in there. And that's had excellent performance and we're continuing to see strong interest there. And I think, again, any country that's concerned about their currency, whether it's U.S. or the euro, are going to be very interested in Global bonds and that's certainly getting more headlines I would argue today than ever. So I still am pretty optimistic on flows there.

Kenneth Worthington - JP Morgan Chase & Co

Great. And then as a follow-up, can you give us a little more information on the SICAV products? What are the asset levels you have in those funds at this point? And if you can, what were the SICAV sales for the quarter?

Gregory Johnson

I don't have the actual breakdown of the sales. It's about $130 billion in assets in the SICAV funds.

Operator

Your next question comes from Cynthia Mayer from Bank of America.

Cynthia Mayer - BofA Merrill Lynch

Maybe just to start, a follow-up on the 2020 campaign question. When I look at the equity funds that you flag for emphasis in the campaign, Templeton Growth is a standout year-to-date, but most of the others are lagging this year. And I'm just wondering if that kind of short-term performance, apart from their long-term records, but does that kind of short-term performance influence the sales or should we assume that, particularly in DC, it's really more important to get on the menu. And then it's demand for that particular asset class.

Gregory Johnson

I think that's exactly right. I think that's why it's so important to get on those platforms, to get the steadier flows and not be vulnerable to short-term swings where it's more discretionary on buying the latest and best as far as the 1, 3 and 5. So you're right, I mean there's some slight under performance in the near term for a couple of those funds. It probably will have, I think, some effect. But again, that's why it's so important for us to get on the retirement platforms where you are less vulnerable and it's more about the 3- and 5-year numbers than it is the 6 months and 1 year.

Cynthia Mayer - BofA Merrill Lynch

Okay. And then I just had a modeling question, which is -- I just wanted to clarify something you mentioned on your pre-recorded commentary. You were talking about the drivers for distribution revenues and expenses and it seemed like you were saying that the biggest driver for both has changed in asset. But the impact seemed to be really different for revenues and for expenses. It had a bigger impact on expenses and so they rose faster. So I'm just wondering if that was something specific for the quarter. Or in modeling ahead, should we assume that assets go up x percent and it should have a similar impact?

Gregory Johnson

I think maybe one of the things to focus on is the mix of international and U.S. in that equation. Because on the expense side, you're going to have expenses, distribution expenses related to both the international products as well as the U.S. products. But on the revenue side, it's essentially or mostly just the U.S. products.

Operator

The next question comes from Dan Fannon from Jefferies & Company.

Daniel Fannon - Jefferies & Company, Inc.

I guess to start off from a capital management perspective, should we view this as kind of a normal quarter for buybacks based on kind of where you're thinking cash flow is going to come in or your cash is sitting today? And then, I guess, an update on what you're potentially thinking about from acquisitions.

Gregory Johnson

Right, I guess if you look at this quarter, it's roughly in line with basically the prior 4 or 5 quarters. And I think that's a good average. And then depending on market conditions, we'll be opportunistic and flex that one way or the other. In terms of acquisitions, we continue to look. We continue to get presented opportunities around the world and we continue to look. So when it makes sense, we'll do something.

Daniel Fannon - Jefferies & Company, Inc.

I mean, is there any specific product or focus? I mean, you've talked about potentially alternatives and a little bit more of a focus in terms of what you would add to your product suite. Has anything else there changed?

Gregory Johnson

No. That hasn't changed. That's probably the focus.

Operator

The next question comes from Douglas Sipkin from Ticonderoga.

Douglas Sipkin - Ticonderoga Securities LLC

Just wanted to follow-up. Obviously, there's a tremendous secular story on the international, both equity and debt. I mean, can you guys put any color on just how much the sustained dollar weakness is maybe enhancing that. And is that a risk pocket if that were to reverse at all, just a little bit? Or is it really just a driver of this secular trend with better growth dynamics?

Gregory Johnson

Well, I think there's no question we're getting the benefit of the weak dollar and the trend towards investing more offshore. The question, what happens when it goes the other way, and we've had it go the other way, and that will hurt performance and some funds and help others depending on the hedging strategies in our Global Bond fund. It doesn't necessarily invest against the dollar all the time. So if they feel like it's going too far, they have the flexibility to move the other way, too. So for us, obviously, probably everything held equal, it's a net-net benefit. I'm not sure what you can do as an entity to hedge yourself against that should it go the other way. But we've been through periods like that before and it's just means certain funds will be out of favor.

Douglas Sipkin - Ticonderoga Securities LLC

And then just a follow up. I just read a couple of pieces talking about how internationally there's some new potential law changes that will provide more disclosure around commissions and things of that nature, I think in Taiwan, maybe in the U.K. How are you guys thinking through that? I mean, will that have any impact on how you sell stuff or is it sort of just more a procedural and not really a change to how you guys are going to sell products?

Gregory Johnson

I think those are wrong. I wouldn't just dismiss those kind of issues. I think they -- it just depends what shape and form. You can have drastic moves like what was done in the India market where they did away with the run and sales charge and whether or not that changes over time I think time will tell. So I think you have to work with the regulators and hopefully come up with some form of disclosure and transparency that works for everyone. But I don't think there's anything in those 2 markets that immediately would be a cause for concern for us right now.

Operator

The next question comes from Marc Irizarry from Goldman Sachs.

Marc Irizarry - Goldman Sachs Group Inc.

Greg, when you think about building the global to local business outside the U.S., I know the market's pretty idiosyncratic, but can you talk about where you're seeing the best share gains locally and where you're not sort of gaining momentum? What are some of the impediments to you gaining share there? And then I'll follow.

Gregory Johnson

Well, generally, it will come down to your relative performance and just like in any market, what's selling. I think for us in the local asset management side, we picked up good share in India and a lot of that's been around just developing fixed income funds that have done well in that market. Korea, on the other hand, has been tough market. And then even though the equity markets been up, equity flows in general there have not been very strong. So it's been more institutional for us than retail. But really, that's the 2 that probably stand out in my mind as far as one or the other. And a lot of the other ones, whether it's China with the JV, I mean, still great potential and profitable, but probably a longer-term venture and one that you don't own more than 50%.

Marc Irizarry - Goldman Sachs Group Inc.

Great. And then when you think about your strong capital position that you're in and you've got a decent amount of cash down south, overseas, how do you think about making acquisitions to sort of bolster your market position in some of those local markets?

Gregory Johnson

Well, I think the fact that we do have a lot of cash overseas and the fact that that's where we're growing gives us a bias towards -- if were going to do an acquisition, all things being equal, will give us a bias towards doing that internationally.

Kenneth Lewis

Yes. And I think the other point is we are in more of these markets than most firms that are looking to get into them. So for us to acquire a firm and combine it, there's a strategic premium built in the multiples for people that are trying to get in, China, India markets that we've been in for a while. So that kind of precludes us from paying that. And that's how we think about it as well. I mean unless it was really an entirely new type of fund management that we didn't have in that market, then you could rationalize doing it. But you you're not going to have a lot of opportunities to say I'm going to grow scale and put these 2 together and make it accretive with some of the points of entry and what people are paying to get in. So I think that's a little bit of a constraint in a lot of markets where we've seen some deals done.

Operator

The next question comes from Jonathan Casteleyn from Susquehanna.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

I'm just wondering if there's any evidence around the municipal outflows you're seeing? Are they being recaptured in other products within the complex?

Gregory Johnson

Yes. I think we talked about that in the last call and I think -- and we said it was a little early and probably we captured half and over this quarter, we captured 1/3. So we captured a little over a $1 billion of what went out.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

And was there a bend, would that $1 billion support some of the more robust equity flows you saw? I mean where exactly is it going?

Gregory Johnson

One of it is going in the lower duration fixed income. That was the only year with positive flows.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

That's helpful. Can you remind me if you gave us a forward tax guidance of the tax rate going forward?

Gregory Johnson

Yes. The adjustment this quarter was -- because we changed estimates to 28.5% for the year.

Jonathan Casteleyn - Susquehanna Financial Group, LLLP

I see. Okay. And then you guys have a pretty good track record of launching new products. You got international equities and obviously Global bonds. Just wondering on a go-forward basis where you think, organically, if you were looking at new product suites, where they might reside?

Gregory Johnson

Really, I would say the area with the greatest opportunity would be around taxable asset allocation, real asset-type funds, funds that will be a little bit more defensive in a rising rate environment. So that's really where we built out our solutions capability. It made a lot of hires in the last couple of years and that's why we're going to see 4 or 5 new funds over the next year or so.

Operator

The next question comes from Bill Katz from Citigroup.

William Katz - Citigroup Inc

Just a follow-up, Greg, I think the answer is it's getting better, but when you talk about the trends continue in April around the Global and Hybrid being lumpy, is it that they've gotten better in March and again in April? Or that they are lumpy, still, in March and April. I apologize, but it wasn't exactly clear in your commentary.

Gregory Johnson

No. I said there was really -- there was nothing that stood out as being lumpy. I said that we don't comment on lumpy post-March 31 as far as our comments go. And Hybrid has obviously been very attractive. And I think it's more of -- so far business as you go. I mean as far as this quarter, new markets are strong and bond markets settle down a bit. So that bodes well for, I think, any Hybrid or Equity fund.

Operator

The next question comes from Cynthia Mayer from Bank of America.

Cynthia Mayer - BofA Merrill Lynch

Apologies if you covered this already. But I think in the pre-recorded commentary, you talked about how investment gains have been up lately because you're reallocating capital investments and rebalancing corporate investment. I'm just wondering if you can give a little color on what changes you're making and why? And whether those gains and losses will stay elevated for a few more quarters?

Gregory Johnson

No. I think -- well I think they were unusually high in the last couple of quarters, I guess, is the way to characterize it. They're not -- it's kind of a realtime decision-making process that's hard to predict going forward. But the changes we made were just on the corporate side, more of a conservative approach, I guess, in terms of shorter duration. And then on the product side, I think we've talked about this before. We have a good discipline of after we make investment on monitoring our investment in the SICAV and then recycling it, for a lack of a better word, to new products. So that does crystallize gains from time to time.

Operator

The next question comes from Michael Kim from Sandler O'Neill.

Michael Kim - Sandler O'Neill & Partners

Just a quick modeling question. Any color on compensation expense looking ahead? I assume you'll have some benefit related to the payroll taxes coming down, but maybe the variable piece continues to move up. So just where you think the net impact of the various moving parts will be going forward?

Gregory Johnson

I think where we're at now is -- we feel like that's a good level given the revenue levels, but a large portion of it is a function of revenue. You'll have some upward pressure on that line for additional headcount probably in the next few quarters, not significant but a little bit. You mentioned the benefit you'll get from the taxes and then depending on which way revenue goes directionally, that will change the language as well.

Operator

The last question comes from Craig Siegenthaler from Credit Suisse.

Craig Siegenthaler - Crédit Suisse AG

When you break up your flows and clients down the South outside the U.S., what is the -- let's say what is the mix of sales between cross-border and in non-cross-border sales? Do you know roughly what that is ballpark?

Gregory Johnson

No, I don't have that. And I don't want to -- you could call our Investor Relations, they'd be happy to give you that number.

Craig Siegenthaler - Crédit Suisse AG

Okay. And then just in terms of the cross-border market itself. Maybe if you could just talk about the 1 or 2 regions where you're seeing the majority of the flows coming from. I know you break out the chart by geography in the past. I'm just wondering which areas are most of the outflows coming from?

Gregory Johnson

Probably Europe and Italy, specifically. It's been extremely strong and outside of that I'm not...

Kenneth Lewis

Asia.

Gregory Johnson

Asia, in general.

Craig Siegenthaler - Crédit Suisse AG

Got it.

Gregory Johnson

Hong Kong, Switzerland. Some of the markets that have been strong.

Craig Siegenthaler - Crédit Suisse AG

Great. I'll follow up after the call.

Operator

At this time, there are no additional questions. Please go ahead with any final remarks.

Gregory Johnson

Well, thank you, everyone, for taking time on the call today. And we look forward to speaking next quarter. Thank you.

Operator

Thank you for participating in the Franklin Resources Second Quarter Earnings Conference Call. This concludes the conference for today. You may all disconnect at this time.

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