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BlackRock, Inc. (BLK), Legg Mason, Inc. (LM): How Central Bank Decisions Affect Hedge Funds

Franklin Resources, Inc. (NYSE:BEN) is also facing some problems, but not as much as Legg Mason, Inc. (NYSE:LM). The California-based company closed the second quarter of 2013 with $823.7 billion in assets under management and a net income increase of 14% to $572.8 million compared to the second quarter of 2012. Although Franklin Resources, Inc. (NYSE:BEN) is focused mainly in the U.S., it has a global footprint including Latin America, Europe, and Asia-Pacific that witnessed growth in AUM in the last quarter.

It has also managed to contain expenses as its operating margin is below BlackRock, Inc. (NYSE:BLK)’s but at a very acceptable 36.1%. The company seems to be recovering from a tough 2012 in which it suffered some downturn in its funds’ performance.

Final comment

Asset managers face the difficult task of facing a possible decrease in money injection from the biggest central banks. This could pose some threats to the bull run the equity markets are having. One could argue that some markets have become addicted to those easing monetary policies and that the situation is still fragile (especially in Europe), but some asset managers are well prepared to face these fears: BlackRock and Franklin. Legg Mason, Inc. (NYSE:LM) will have to take quick measures to stop the withdrawals or it could be the biggest loser.

Vanina Egea has no position in any stocks mentioned. The Motley Fool recommends BlackRock.

The article How Central Bank Decisions Affect Hedge Funds originally appeared on and is written by Vanina Egea.

Vanina is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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