Franklin Resources, Inc.

Welcome to the Franklin Resources Earnings Conference call for the quarter and fiscal year ending September 30th, 2022. My name is Candice 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 on listen-only mode. I would now like to turn the conference over to your host, Celine Ho, Head of Investor Relations of Franklin Resources, you may now begin.

Good morning and thank you for joining us today to discuss our quarterly and fiscal year results. Please note that the financial results to be presented in this commentary are preliminary. Statements made on 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 filings with the Securities and Exchange Commission, including in the risk factors and the MD&A sections of Franklin's most recent Form 10-K and 10-Q filings. With that, I'll turn the call over to Jenny Johnson, our President and Chief Executive Officer.

Thank you, Celine. Hello, everyone. And thank you for joining us today to discuss Franklin Templeton's fourth quarter and fiscal year 2022 results. As usual, Matt Nichols, our CFO and COO, and Adam Spector, our Head of Global Distribution, are also joining me on the call. This month, we officially celebrate our 75th anniversary as a company. Our firm was founded on the values of advice, active investment management, and helping people achieve the most important financial milestones of their lives. Since 1947, we have transformed from modest beginnings into one of the world's largest investment managers. And today, we partner with millions of clients in more than 155 countries. Although much has changed in 75 years, we are proud to say We have a history of innovation and we have always maintained our commitment to evolve our organization to meet the needs of our clients and shareholders around the globe. Consistent with this, I'm pleased to say that we made good progress in fiscal 2022 on executing our long-term plan and further diversifying our business by expanding our investment capabilities and deepening our presence in key markets and channels. Since January, macroeconomic and geopolitical uncertainty have resulted in significant volatility and correlated declines in both global equity and fixed income markets. Our assets under management and flows were impacted by these unprecedented conditions and industry-wide pressures. However, as always, we've been actively engaging with our clients by providing insights and thought leadership to help them navigate the latest conditions including drawing upon the expanded resources of our various specialist investment managers and the Franklin Templeton Institute. This fiscal year, notwithstanding flow pressures, investor interest continued in all asset classes. We benefited from having a diversified mix of assets and generated net inflows in the alternative and multi-asset categories and reduced net outflows in equities. offset by increased outflows in fixed income and steep market declines. In terms of our progress, we are more diversified than at any point in our history across asset classes, client type, regions, and investment vehicles. Starting with asset classes, we continue to thoughtfully expand our alternative investment capabilities, which are an increasing source of client demand and can offer superior returns. Just a few years ago, we managed about $15 billion in alternative assets. Pro forma for Alcentra, as of September 30th, today we manage $260 billion, or approximately 20% of our AUM in alternatives, and these assets account for an even higher percentage of adjusted revenues. This makes Franklin Templeton one of the largest managers of alternative assets. Speaking of Alcentra, we were excited to announce today the completion of our acquisition ahead of schedule. Alcentra is one of the largest European credit and private debt managers and with this closing, our alternative credit assets under management nearly doubled to 75 billion and we expand our capabilities into Europe. We now have a meaningful portion of the key alternative categories including secondary private equity with Lexington Partners, real estate with Clarion Partners, hedge funds with K2 Advisors, alternative credit with Benefit Street Partners and Accenture, and venture capital with Franklin Venture Partners. For the fiscal year, alternative net inflows were $6.3 billion, including outflows in liquid alternative strategies. Our three largest alternative managers, BSP, Clarion, and lexington each had positive net flows with a combined total of approximately 12 billion there is tremendous opportunity in the democratization of private markets as individual investors are under allocated to the asset class when compared to institutions over the past year we have focused on product development and suitability sales and marketing and client education in the distribution of alternatives in wealth management. On the product side, BSP recently launched its first multi-strategy interval fund. Additionally, Clarion Partners Real Estate Income Fund and Franklin BSP Capital Corporation, a private business development corporation, were onboarded on two alternative fintech platforms that offer direct access to financial advisors and individuals. Again, this is all part of our broader effort to enable more investors to benefit from diversification of private markets and other alternative strategies. In this regard, to complement institutional-focused resources within our specialist investment managers, we have created a dedicated alternatives distribution team that covers wealth management channels. In addition to being diversified within our alternative asset strategies, we also benefit from a broad range of fixed income, equity, and multi-asset strategies. In the multi-asset category, our flagship Franklin Income Fund, which has an approach that is adjustable to changing market conditions, generated net flows of $4.8 billion in the year due to increased interest from investors in Asia and Europe. Turning to fixed income, we benefited from a broad range of fixed income strategies with non-correlated investment philosophies, including positive net flows into US income, intermediate, and highly customized. Notwithstanding the pressure in growth equity in particular, equity net outflows improved by 61% from the prior year, with positive net flows across a diverse array of strategies, including infrastructure, sector, emerging markets, all-cap core, and equity income. From a client perspective, less than three years ago, retail investors represented 74% of our asset mix. Today, our business is balanced with approximately 50% individuals and 50% institutions. Furthermore, we continue to expand our private wealth management business and Fiduciary Trust International generated its eighth quarter of consecutive positive long-term net flows. Our firm is also diversified by geography, and our efforts to implement a regionally focused distribution model that has shifted decision-making and resources closer to our clients is yielding results. For example, we have seen an improvement in our non-US business, including a 70% reduction in long-term net outflows from the prior year. EMEA long-term net flows turned positive, and there was a significant decrease in long-term net outflows in our APAC region. Turning to diversification by investment vehicle. We continue to build on our strengths in delivering investment expertise to our clients' investment vehicles of choice. Similar to the industry at large, we are seeing strong demand for SMAs and ETFs in particular. We are a leading franchise in SMAs with $100 billion in assets, and this year we enhanced our position by acquiring O'Shaughnessy Asset Management and its custom indexing platform, Canvas, with positive net flows since acquisition. Today, our ETF AUM is in excess of $11 billion, and we continue to have positive net flows. Our ETF platform is differentiated with approximately 50% of our AUM in actively managed strategies. The evolution of technology in the industry continues to be another area of focus. This year, we made four minority investments in wealth distribution technology firms that expand access to private securities and or digital assets to individuals. We launched the world's first tokenized US registered mutual fund as well as two digital asset SMA strategies. In June, we opened a second FinTech incubator in Singapore and now have corporate investments in 14 early-stage companies separate from our venture capital funds. In January, we successfully launched the Hello Progress campaign globally to introduce a refreshed view of Franklin Templeton. The campaign reinforced the trusted relationships we have built with clients for 75 years, highlights the increased breadth of the firm, and reflects our commitment to finding innovative ways to meet client needs. Looking forward, we will continue to purposefully invest in key areas of growth across all geographies, including technology, alternative assets, customization, wealth management, and distribution initiatives that benefit all our investment teams. Of course, none of our efforts this past fiscal year would be possible without the hard work and dedication of our employees, of which I and our leadership team very much appreciate. I'd like to turn the call over to our CFO and COO, Matt Nichols, who will review our financial results from the fiscal quarter and year. Matt?