Fund Giants Post Solid Gains; Janus Disappoints

Mutual fund giants Franklin Resources Inc., T. Rowe Price Group Inc. and Amvescap all beat analysts’ estimates in reporting second-quarter earnings Thursday.

But Janus Capital Group Inc., which has struggled since its growth-investing style went out of favor after the 2000-02 bear market, missed profit estimates for the quarter.

Franklin, the San Mateo, Calif.-based manager of the Franklin and Templeton funds, said net income in the quarter ended June 30 jumped 42% from a year earlier, to $371.4 million, or $1.41 a share. Fee revenue rose as investors pumped cash into the company’s foreign stock funds.

Gross purchases of Franklin’s foreign stock funds were $15.2 billion in the quarter, up from $10.8 billion a year earlier.

Total assets under management were $490 billion as of June 30, up from $425 billion a year earlier.

Franklin has benefited in recent years from U.S. investors’ hunger for foreign stocks, which on average have performed far better than U.S. shares.

But foreign and U.S. stocks slid from mid-May to mid-June, and have been volatile since.

Franklin shares, which hit a record high of $103.53 in February, fell as low as $81.23 in June. They rose $2.86 to $87.20 on Thursday after Franklin topped analysts’ average profit estimate of $1.26 a share.

Results for three other fund companies that reported second-quarter data:

* Baltimore-based T. Rowe Price said earnings rose 32%, to $135.7 million, or 49 cents a share. That beat analysts’ average estimate of 46 cents a share.

Average assets under management climbed to $294 billion, boosted by a net cash inflow of $7.7 billion in the quarter.

The company’s shares rose $1.98 to $39.03 on the report.

* Atlanta-based Amvescap, manager of the AIM and Invesco funds, said profit soared 63%, to $117.1 million, or 15 cents a share. Assets reached $414 billion.

Results were boosted by net cash inflows to the company’s European and Asian investment management units; its U.S. unit had a net outflow.

Amvescap shares added 66 cents to $19.43.

* Janus Capital said earnings were $31.1 million, or 15 cents a share, up 21% from $25.7 million, or 12 cents, a year earlier. But analysts’ average earnings forecast was 16 cents a share, according to Reuters Estimates.

Denver-based Janus, a fabled growth stock manager in the heyday of technology stocks during the late 1990s, has seen heavy client defections since those stocks crashed in 2000-02, dragging many of its funds down.

Assets under management were $153.4 billion at the end of June, down from $158.1 billion at the end of March, because of a net cash outflow and market depreciation as stock values fell.

Chief Executive Gary Black said Janus would take a charge in the third or fourth quarter because a client is pulling some assets: Dutch insurance company Aegon NV plans to transfer management of the $2.4-billion Transamerica IDEX Janus Growth Fund to Aegon’s Transamerica Investment Management unit in Los Angeles.

A bright spot for Janus has been its Intech unit, which uses mathematical models to pick stocks. The unit had a net cash inflow of $2.6 billion in the second quarter.

Janus shares fell 65 cents to $16.29 on Thursday.