WRAPUP 1-Fee pressures drive down revenue at big asset managers

* Janus, Franklin revenues decline in September quarter

* Analyst cites shift away from equities to lower-fee bond products

* Shares of Janus and Franklin fall

Oct 25 (Reuters) - Two big asset managers reported quarterly revenue declines on Thursday as investors moved into lower-fee fixed-income funds.

Janus Capital Group said its third-quarter revenue had fallen 12 percent to $209 million, mostly because it had added more performance fees for its mutual funds.

Also on Thursday, Franklin Resources Inc reported a 1 percent dip in quarterly operating revenue to $1.82 billion. Lower investment management fees were the main reason for the decline.

Both figures were striking because fund companies' results traditionally have matched changes in U.S. stock indexes, which have risen in the past year. Both Janus and Franklin reported higher assets under management than they did for the previous quarter and the year-earlier period.

But with bond funds drawing more investor interest after the financial crisis, stock index gains may not provide the growth they once did.

One reason for the lower revenue, at least for Janus, was a shift by investors into fixed-income products, which tend to carry lower fees, and away from the traditional high-fee equity funds that once propelled the company's results, Gabelli & Co analyst Macrae Sykes said.

Although investors withdrew $2 billion from Janus funds overall during the quarter, the company reported net sales of $1 billion of its fixed-income products.

``There's always pressure on fees, but the impact now ... is the money flowing more into the fixed-income side,'' Sykes said.

Janus also has begun using more fees tied to the performance of its funds. With many funds trailing peers, the fee structure lowered revenue by $20.9 million in the quarter, compared with a reduction of $3.1 million in the year-earlier period.

The story was similar at Franklin. The company reported $2.9 billion in net new flows of investor cash. The flows were driven by money that investors put into Franklin's bond funds, while they withdrew cash from its global and domestic equity funds.

Shares of Franklin were down 1.9 percent at $126.00 in midday trading, while Janus fell 2.4 percent to $8.20.

Denver-based Janus reported net income of $25.1 million, or 14 cents per share, down from $27.4 million, or 15 cents per share, a year earlier.

The profit met analysts' average estimate of 14 cents per share, according to Thomson Reuters I/B/E/S.

San Mateo, California-based Franklin said net income had risen to $492.1 million, or $2.31 per share, in the fourth quarter ended Sept. 30 from $416 million, or $1.88 per share, a year earlier.

Analysts on average expected earnings of $2.30 per share, according to Thomson Reuters I/B/E/S.