A torpid market for growth funds may be just what Franklin Resources Inc. needs to pull itself out of a two-year slump.

Its bank sales of value and fixed-income funds — which have performed steadily for four quarters — appear to be gaining strength. H.G. “Toby” Mumford, the head of bank-channel sales for San Mateo, Calif.-based Franklin, said bank sales of the funds are up this year, though he would not divulge any figures.

He said the reason for the improvement is twofold: Franklin’s fund families, which include Franklin and Mutual Series Funds, have performed well compared with other fixed-income and equity value funds, and investors are taking more to funds that use these investment styles — both of which are long associated with Franklin.

Several bank brokerages also say sales of the funds have been brisk in 2001.

Greg Knopf, the managing director of HighMark Funds, a division of Union Bank of California, said he has seen sales of Franklin’s tax-free and value funds pick up. Right now, he said, Franklin’s tax-free funds are the No. 2 seller at Union Bank, behind HighMark’s own California municipal bond fund.

A broker at a large Midwestern bank said investors’ newfound interest in value and fixed-income funds has spurred sales of Franklin funds at the broker’s unit and that Franklin’s wholesalers are good about providing bank brokers with sales support in the form of things like literature and performance reports.

Franklin, a pioneer in bank sales of mutual funds, has far to go to reclaim its place as a top bank seller — or top fund seller, period.

In 1997, Franklin was among the three biggest bank sellers of mutual funds, largely because of its fixed-income fund sales, said Ken Kehrer, a bank-investment consultant who tracks bank sales of investment and insurance products. But interest in Franklin’s funds waned, he said, as bank customers turned to stock funds in 1998 and 1999.

Franklin’s retail mutual fund assets peaked April 30, 1998, at $178.9 billion. Franklin first started getting net outflows in its funds across all channels that July, according to the Boston mutual fund tracking firm Financial Research Corp.

As of June 30, 2001, those assets had dwindled to $160 billion, according to Lipper Inc., a mutual fund tracking firm in Denver. A Franklin spokesman disputed that figure, saying it was closer to $170 billion. Franklin reported that at midyear its total assets were $267.9 billion, though this included its April purchase of the wealth-management firm Fiduciary Trust.

Geoff Bobroff, a mutual fund consultant in Providence, R.I., attributed Franklin’s slide to loss of investor interest in international, value and fixed-income funds — the best-known investing styles of Franklin and its subsidiaries, Templeton Funds and Mutual Series Funds.

But Lou Harvey, the president of Dalbar Inc., a mutual fund research firm in Boston, said weak cross-sales were also to blame. When the investing style of international funds fell out of favor in the late 1990’s, he said, Templeton Funds were hit hard, because Franklin’s salespeople were not quick to redirect investors to other funds in the Franklin complex. “If you don’t have your sales machine well-oiled, people will go elsewhere,” Mr. Harvey said.

Peter Jones, the president of Franklin Templeton Distributors Inc., Franklin’s distribution arm, said the company has made strides toward better cross-selling. “Too often the relationship between clients and investors is just a single-product relationship,” he said. “If you have someone who loves tax-frees, it’s too easy to keep selling them tax-frees.”

To boost cross-sales, Franklin created compensation incentives for them in the second quarter, Mr. Jones said, but he declined to detail them.

Mr. Mumford said selling funds through banks is harder than selling through wire houses or financial planners, which Franklin also does. Unlike wire house brokers, who tend to work as a group out of a single office, bank brokers are spread further apart, making it more time-consuming and costly for fund wholesalers to meet with them, he said. Also, a single bank broker may have offices in several different bank branches, and often move back and forth between them, Mr. Mumford said.

Roughly 20 banks account for the bulk of Franklin’s sales, but the company has sales relationships with about 200, through direct or third-party marketers, Mr. Mumford said.

Franklin has 38 bank-dedicated wholesalers, half of whom work in the field and half in the office, Mr. Mumford said. The external wholesalers call on the top 20 banks that sell the most Franklin funds. The internal wholesalers, who work out of San Mateo or St. Petersburg, Fla., call on the rest of the 200-odd banks that constitute a smaller share of Franklin’s business, he said.

Mr. Mumford and other key account managers work with executives at banks to get products approved for sale. A separate group, the business development group, hunts for prospects, and another pair of wholesalers call on bank trust departments, he said.

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