Franklin Templeton [profile] Franklin Resources announced its third quarter earnings this week. The company reported a net income of $552.3 million or $0.86 per diluted share, two pennies above analyst expectations, Reuters reported. Last year's third quarter net income was higher, at $572.8 million or $0.71 per diluted share. Net flows increased 75 percent to $8.4 billion, Reuters writes.

Its AUM was $815 billion for the third quarter 2013, up from $707 billion for the third quarter of 2012. Sterne Agee analysts kept its neutral position on the company, Barrons writes. Franklin also announced a 3-for-1 stock split, paid as stock dividend to common stockholders of record, Zacks writes.

Looking through Franklin's earnings call transcript at Seeking Alpha, three issues were raised that merit being mentioned:

POINT 1: The highest redemptions on the equity fund side were in the Asian Growth Fund. POINT 2: Senior management wouldn't indicate whether or not the global fund franchise is seeing net inflows.

POINT 3: There is some hesitation on the part of advisers to put investors in active equities.

POINT 1: The highest redemptions on the equity fund side were in the Asian Growth Fund.

Daniel Thomas Fannon of Jefferies LLC, posed a question to Franklin CEO, Greg Johnson:

Fannon: You mentioned on the call that redemptions in July broadly subsided. I guess, if you could talk about the gross sales kind of aspect of that, as well as if it was the same funds that were heavily being redeemed, if there's been any change in terms of demand, just on the more shorter-term basis.

Johnson: Well, again, I'll speak in generalities because that's what we do as far as the forward quarter and what is happening now. And like the market, I mean, when things settle down, obviously, the spike in rates and how that affects the longer-duration funds, I mean, I think those continue to be under pressure. Municipal bonds, because they've kind of been in a perfect storm as far as policy and some problems in the market, with Detroit, obviously, that continues to put pressure on the municipal bond market. But overall, I think the funds that had the highest redemptions, and for us, on the equity side, was the Asian Growth Fund. So as things settle, that tends to be a fund that comes back faster than others and tends to -- and redemptions increase pretty quickly when you have a selloff in those markets. So that would be one. And global bonds on a relative basis, again, you had the backup. But we've had excellent performance and very strong prior month for that strategy. So I think that, that helps that hold assets and stem redemptions as well.

POINT 2: Senior management wouldn't indicate whether or not the global fund franchise is seeing net inflows.

Kenneth Worthington of J.P. Morgan Chase asked Johnson a question about flows in the global fund franchise:

Worthington: First, just to call out global bond one more time. Is the franchise in redemption in July? I think it was in redemption in June. In your comments on the prepared remarks and to other people suggested that at least the growth redemptions have slowed, but I couldn't tell if the net had turned positive or not.

Johnson: Well, that means I gave you the correct answer. We don't really talk about specific flows because I think we don't want people to make that assumption, that just because you're in a shorter period one way or another, that's where we're going to end up for the quarter. So I think I'm going to have to leave it that it's still under pressure, but better, and not get into exactly where we are to date on that.

POINT 3: There is some hesitation on the part of advisers to put investors in active equities.

Gregory Warren of Morningstar asked Johnson whether or not there was hesitation to invest in active equities.

Warren: Okay. Did you feel like there's some hesitation on the part, at least in the adviser channel, to put people into more active equities, and it's just a safer bet to put them into passive right now?

Johnson: I don't think that's the case with global equities. I mean, I think possibly a little bit more with U.S. But on the global side, I think active managers continue to do well. I just think there's just more demand for more satellite-type offerings with -- on the retail side of regional funds and versus your just big global equity fund. So that's -- but our focus has been also to talk about global equity as the core holding and then build your -- and differentiate your holdings around it, instead of just having the big U.S. large-cap value or growth, but starting with Templeton, starting with the growth fund. And I think that, that is making progress as we see global equities continue to dig into share. But certainly, U.S. has been the strongest market here in the last few years. So that's not really helping that. But performance eventually is the lead, and that looks good. So I think that we're optimistic.

See the transcript of Franklin's earnings call and the earnings release for more on how Franklin is doing.  

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