(Bloomberg News) Franklin Resources Inc., manager of the Franklin and Templeton mutual funds, said fiscal fourth- quarter profit rose 18 percent as stock markets rallied and assets under management increased.

Net income for the three months ended Sept. 30 increased to $492.1 million, or $2.31 a share, from $416 million, or $1.88, a year earlier, the San Mateo, California-based company said today in a statement. Eleven analysts surveyed by Bloomberg expected earnings averaging $2.28 a share.

Franklin's equity assets rose 17 percent to $297.1 billion in the year ended Sept. 30, as bond assets rose 13 percent to $336.3 billion. Chief Executive Officer Gregory Johnson has urged investors to put more money into stock funds, arguing that in the coming years equities are likely to deliver better returns than they did in the past decade.

"A big driver is just the fact that assets are meaningfully higher than they were 12 months ago," Michael Kim, an analyst with Sandler O'Neill & Partners LP in New York, said in a telephone interview before results were announced. "They've still been able to generate positive overall organic growth and that speaks to the diversification of Franklin's investment-management capabilities."

The company's flagship fund, the $63 billion Templeton Global Bond Fund, bounced back this year after it trailed 91 percent of rivals in 2011, according to data compiled by Bloomberg. The fund, managed by Michael Hasenstab, gained 13 percent this year through Oct. 23, better than 88 percent of peers. Over five years, the fund topped 94 percent of rivals.

Index Gains

The Standard & Poor's 500 Index, a benchmark for U.S. stocks, gained 5.8 percent last quarter and global stocks, as measured by the MSCI AC World Index, rose 6.2 percent. More than 70 percent of Franklin's equity money is in global and international funds.

Investors withdrew $82.6 billion from U.S. mutual funds that buy domestic stocks this year through September, while adding $18.6 billion to international equity funds, according to data compiled by Chicago-based Morningstar Inc.

BlackRock Inc., the world's largest asset manager, said clients redeemed a net $55 billion in the third quarter, even with deposits of $20.5 billion into equity exchange-traded funds. BlackRock said an institutional investor pulled more than $72 billion from a fixed-income portfolio after the firm declined to rebid for the business at lower fees. Assets rose 3.2 percent during the three months to $3.67 trillion, the company said last week, fueled by market gains of $134 billion.

T. Rowe Price Group Inc. said yesterday third-quarter earnings rose 33 percent as global stock markets rallied and investors made net deposits of $4.3 billion. Assets rose 6 percent to $574.4 billion during the quarter as market appreciation added $28.4 billion.

Franklin shares advanced 34 percent this year through yesterday's close, compared with an increase of 18 percent for the 20-member Standard & Poor's index of custody banks and asset managers.