Franklin Resources Reports Strong Growth in Net Inflows and Alternatives Amid Record Assets Under Management
Record $1.68 Trillion in AUM Driven by Robust Inflows and Expansion in Alternatives
Franklin Resources, Inc. (NYSE: BEN) started its fiscal year with a solid performance, reporting long-term net inflows of $28.0 billion for the quarter ended December 31, 2025. This was the firm’s ninth consecutive quarter of positive flows, powered by all major investment categories and a significant presence in both public and private markets. Ending assets under management (AUM) reached a new record of $1.684 trillion, up 7% from one year ago, bolstered by strong investor demand for alternatives, equities, ETFs, and retail SMA products.
Alternative Asset Growth Leads the Way, Highlighting Strategic Acquisitions
Alternative assets continued to be a highlight, with fundraising of $10.8 billion in the quarter—including $9.5 billion in private market assets. Lexington Partners’ global co-investment fund closed at $4.6 billion, marking significant progress since Franklin’s acquisition of Lexington in 2022 (AUM up 46% since then). With the closing of Apera Asset Management, U.S. and European alternative credit platforms are now consolidated under the expanded Benefit Street Partners brand—representing $95 billion in AUM at quarter end.
Other business lines also saw healthy expansion: The ETF franchise hit a record $58 billion in AUM, achieving its 17th consecutive quarter of positive net flows. Retail Separately Managed Account (SMA) AUM exceeded $170 billion, timed with $2.4 billion in net inflows. Canvas, the firm’s custom index solution, now boasts $18 billion in AUM, up 11% quarter-over-quarter.
| Key Figures (Q1 FY2026) | Dec 31, 2025 | Sep 30, 2025 | Dec 31, 2024 | Q/Q % | Y/Y % |
|---|---|---|---|---|---|
| Ending AUM ($bn) | 1,684.0 | 1,661.2 | 1,575.7 | 1% | 7% |
| Long-Term Net Flows ($bn) | 28.0 | -11.9 | -50.0 | -- | -- |
| Net Income ($m) | 255.5 | 117.6 | 163.6 | 117% | 56% |
| Diluted EPS ($) | 0.46 | 0.21 | 0.29 | 119% | 59% |
| Adjusted Net Income ($m) | 378.4 | 357.5 | 320.5 | 6% | 18% |
| Adjusted Diluted EPS ($) | 0.70 | 0.67 | 0.59 | 4% | 19% |
| Adjusted Operating Margin (%) | 25.0 | 26.0 | 24.5 | -1 ppt | +0.5 ppt |
Disciplined Expense Management and Margins
Franklin Resources continues to balance growth and profitability, as highlighted by a 25% adjusted operating margin (versus 26% last quarter). Net income and adjusted net income surged by 117% and 6% quarter-on-quarter, with diluted EPS and adjusted diluted EPS following suit.
Operating revenues came in at $2.33 billion, a slight decrease sequentially, while operating income increased significantly thanks to lower expenses (notably, a sharp reduction in intangible asset amortization and impairment). Management remains disciplined on expenses, even as it invests in priority areas such as alternatives and technology innovation.
| Revenue Breakdown ($m) | Q1 FY2026 | Q1 FY2025 | Y/Y % |
|---|---|---|---|
| Operating Revenues | 2,327.1 | 2,251.6 | 3% |
| Investment Mgmt Fees | 1,847.9 | 1,799.3 | 3% |
| Sales & Distribution Fees | 388.7 | 375.5 | 4% |
| Shareholder Servicing Fees | 70.9 | 63.5 | 12% |
| Other Revenue | 19.6 | 13.3 | 47% |
AUM Growth Broad Based Across Asset Classes and Regions
Growth was broad-based, with equity AUM up 2% sequentially and 13% from the prior year, alternative assets up 4% quarter-over-quarter, and multi-asset up 3%. Fixed income AUM was roughly flat compared to the previous quarter. Regional expansion was also strong, particularly in EMEA (Europe, Middle East, and Africa), which posted a 6% jump in AUM this quarter.
| AUM by Asset Class ($bn) | Dec 31, 2025 | Q/Q % | Y/Y % |
|---|---|---|---|
| Equity | 697.2 | 2% | 13% |
| Fixed Income | 437.7 | 0% | -7% |
| Alternative | 273.8 | 4% | 10% |
| Multi-Asset | 198.8 | 3% | 14% |
| Cash Mgmt | 76.5 | -3% | 21% |
Long-Term Net Inflows Fuel Momentum Across Equity, Multi-Asset, and Alternatives
Net flows tell the story of investor confidence: Franklin posted $118.6 billion in gross long-term inflows in the quarter, versus $90.6 billion in long-term outflows, for a net gain of $28.0 billion. Excluding Western Asset Management (which had $6.6 billion in outflows), net inflows totaled $34.6 billion, almost double last year’s Q1 result.
Of note, alternatives fundraising was diversified across secondary private equity, credit, and real estate, spanning institutions and the wealth channel. Meanwhile, the ETF and Canvas platforms remained net inflow positive, underscoring the benefits of Franklin’s diversified model.
Strategic Positioning and Outlook
CEO Jenny Johnson highlighted that expenses remain tightly managed even as the company invests in next-generation growth engines, especially in alternatives, ETFs, and direct index solutions. “Our diversified business model, global scale, and client-first culture position us well to capture the long-term trends reshaping our industry,” she said.
This quarter’s results underscore Franklin’s ability to attract assets in a competitive environment, especially at scale in alternatives and ETFs. For investors and industry watchers, the combination of positive momentum in flows, growing franchise value in alternatives, and continued expense discipline signals a firm intent on driving sustainable, profitable growth.
Key Takeaways
- Franklin’s record AUM and sustained net inflows demonstrate the strength and breadth of its global franchise.
- Alternative investments, ETFs, and retail SMAs are increasingly central to growth—and Franklin’s acquisitions and platform innovations are paying off.
- While the adjusted operating margin ticked down, absolute profit metrics and flows remain robust, reinforcing Franklin’s standing as a diversified, growth-oriented asset manager.
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