MutualFundWire.com: Is Trump's Victory Worth $6B to Franklin Templeton?

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Wednesday, November 30, 2016

Is Trump's Victory Worth $6B to Franklin Templeton?

Donald Trump's presidential election victory could be a boon to mutual fund shops, especially Franklin Templeton [profile] and its shareholders.

Susan Roth Katzke
Credit Suisse
Managing Director

Credit Suisse analysts Susan Roth Katzke, Craig Siegenthaler, and John Nadel, as highlighted by Teresa Rivas in Barron's, argue that Trump pushing through corporate tax reform (namely cuts) "would be very helpful for the traditionals," i.e. traditional asset managers. And the analysts note that Franklin Templeton's publicly-traded parent company might also like repatriation incentives that Trump could pursue.

"Franklin Resources (BEN) has $8B of cash trapped outside of the US, and we estimate that they could bring $6B back to the US in the event of a tax repatriation holiday," the Credit Suisse analysts write.

$6 billion is no chump change, considering that Franklin's current market cap is $21.64 billion.

Yet the analysts don't see such a holiday being a big boon for other fund firms ("most US asset managers repatriate most of their foreign earnings back to the US" already, they note). And the analysts also worry that alternative asset managers might be hurt if tax changes affect pass-through incentive income or carried income.

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