Strong long-term net flows
Recorded $16.9 billion in long-term net inflows this quarter; long-term inflows of $118 billion were up 28% quarter-over-quarter and 38% year-over-year (excluding reinvested distributions).
Franklin Resources
· BEN
April 28th, 2026
Summary
- Earnings Call Date:
- 2026-04-28
- Change Since:
- +10.22%
- Next Earnings Date:
- 2026-07-24
Earnings Call Sentiment
PositiveThe call presented a strongly positive operational and commercial performance narrative: robust diversified long-term net inflows, exceptional alternatives and ETF momentum, improving investment performance, and margin expansion potential supported by disciplined expense guidance. Notable headwinds included equity and modest fixed income outflows, elevated near-term fundraising and AI investment expenses, and some timing/visibility risk around fee recognition in alternatives and regulatory/tax uncertainties. On balance, the positive growth, fundraising, AUM gains, and improving profitability outlook materially outweigh the listed challenges.
Company Guidance
The company guided Q3 to an effective fee rate in the “mid‑to‑high 37s,” with compensation of $830M (assuming a $50M performance fee at a 55% payout), IS&T of $155M, occupancy of $70M, and G&A of $210–215M (including $23–25M of fundraising-related expense and $9–10M of incremental advertising/marketing). The full‑year outlook assumes flat markets from here and excludes performance fees, incorporates the announced voluntary buyout, and expectsFY‑end expenses roughly in line with or about 1.5% above fiscal 2025 (ex‑performance fees) while investment management fee revenue is expected to grow at least ~6% (i.e., ~4x the expense rate), implying Q4 margins in the high‑29% range and a full‑year margin in the 27% range on the way to 30%+ margins in 2027.
Record gross sales and diversified inflows
Positive long-term net flows across every region and multiple channels (public and private markets), with multi-asset generating $9.5 billion (19th consecutive quarter of positive flows) and ETF net inflows of $4.5 billion (18th consecutive quarter).
Assets under management and platform scale
Total AUM of $1.68 trillion with alternatives AUM of $283 billion and private credit representing $96 billion of that base.
Robust alternatives and private markets fundraising
Raised $14.3 billion in alternatives this quarter (including $13.2 billion in private market assets); fiscal year-to-date private markets fundraising of $22.7 billion, tracking to exceed the $25–30 billion target and management expects to be above $30 billion for the year.
ETF growth and market traction
ETF AUM reached $61.6 billion, up 67% year-over-year; active ETFs represent 45% of ETF AUM and the Putnam Focused Large Cap Value ETF is approaching $10 billion.
Retail SMA and Canvas momentum
Retail SMAs at $168.3 billion with $2.7 billion in net inflows this quarter; Canvas reached record AUM of $22.9 billion (up 27% quarter-over-quarter), with $5.3 billion in positive net flows and continued strong adoption (Canvas cited as growing ~72% CAGR and 10x since acquisition).
Investment performance
More than half of mutual fund and ETF AUM outperformed peer medians over 3- and 10-year periods (~two-thirds over 1- and 5-year); 95% of municipal AUM outperforming peer group over three years; fixed income 83% and equities 82% of AUM outperforming benchmark over relevant periods.
Improved profitability and margins trajectory
Adjusted operating income of $475 million, up 8.5% quarter-over-quarter and 25.8% year-over-year; management expects FY expense growth of ~1.5% with investment management fee revenue growing meaningfully faster and margin expansion (Q4 margin guidance high-29s; full-year margin in the 27s; target 30%+ by 2027).
Global diversification and distribution strength
Non-U.S. gross sales grew 29% quarter-over-quarter, positive long-term net flows outside U.S. of $5.5 billion, and institutional pipeline of $20.2 billion (won but unfunded mandates consistent with prior quarter).
Strategic innovation and digital initiatives
Progress on AI (Intelligence Hub) showing early sales efficiency gains (wholesalers engaging ~10% more clients), and plans to expand digital assets via acquisition of 250 Digital and launch of FranklinCrypto, plus tokenized ETF experiments on exchanges.
Operator
Welcome to Franklin Resources, Inc. Earnings Conference Call for the Quarter Ended 03/31/2026. Hello, my name is Nicole, and I will be your call operator today. As a reminder, this conference is being recorded, and at this time, all participants are in a listen-only mode. I would now like to turn the conference over to your host, Selene Oh, Head of Investor Relations for Franklin Resources, Inc. You may begin.
Selene Oh
Good morning, and thank you for joining us today to discuss our quarterly results. Statements made on this conference call regarding Franklin Resources, Inc. which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties, and other important factors are described in more detail in Franklin Resources, Inc.’s recent filings with the Securities and Exchange Commission, including in the Risk Factors and the MD&A sections of our most recent Forms 10-K and 10-Q. Now I would like to turn the call over to Jennifer M. Johnson, our Chief Executive Officer. Thank you, Selene.
Jennifer M. Johnson
Welcome, everyone, and thank you for joining us today to review Franklin Resources, Inc.’s second fiscal quarter results. I am joined by Matthew Nicholls, Co-President and CFO, and Daniel Gambach, Co-President and Chief Commercial Officer. We will ...
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