Franklin Templeton (NYSE: BEN) flips long-term outflows to $84.1 billion of inflows

What happened

Franklin Templeton, Inc. (NYSE: BEN) swung to $84.1 billion of long-term net inflows in fiscal 2026 from $97.4 billion of outflows the year before.

The preliminary, unaudited results, released Nov. 6, also show a fiscal-year operating margin of 12.5%, up from 6.9% in fiscal 2025. The fiscal year ended Sept. 30.

Net income was $1.08 billion, or $1.97 per diluted share, against $524.9 million, or $0.91, a year earlier. In the fourth quarter, net income was $380.1 million, or $0.72 a share, compared with $117.6 million, or $0.21, a year earlier.

Key numbers

Metric	Latest	Change	Source
Fiscal-year long-term net flows	$84.1 billion	from -$97.4 billion, +$181.5 billion	Calculated from SEC 8-K
Fiscal-year operating margin	12.5%	from 6.9%, +5.6 percentage points	Calculated from SEC 8-K
Fiscal-year net income	$1.08 billion	from $524.9 million, +105%	SEC 8-K Exhibit 99.1
Fourth-quarter net income	$380.1 million	from $117.6 million, +223%	SEC 8-K Exhibit 99.1
Fiscal-year operating revenues	$9.42 billion	from $8.77 billion, +7%	SEC 8-K Exhibit 99.1
Ending assets under management	$1.80 trillion	from $1.66 trillion, +8%	SEC 8-K Exhibit 99.1

Read more: Franklin Templeton (BEN) company research

Where the flows came from

Fourth-quarter long-term net inflows were $20.8 billion, against net outflows of $11.9 billion a year earlier. Alternatives supplied $9.5 billion of the total, multi-asset added $7.9 billion and equity $4.0 billion. Fixed income was the one long-term asset class with net outflows, at $0.6 billion.

CEO Jenny Johnson said flows were positive in every quarter of the fiscal year, across all regions and in both retail and institutional channels. Alternative AUM reached $304.6 billion. Fundraising for the year was $48.7 billion, including $43.2 billion in private markets.

ETF AUM rose 73% to $84.6 billion, retail SMA AUM grew 19% to $196.3 billion and Canvas AUM doubled to $32.6 billion. International AUM reached about $525 billion, with $29.0 billion of long-term net inflows.

One drag sits inside the full-year total. Western Asset Management had $11.7 billion of long-term net outflows for the fiscal year. The institutional pipeline of won-but-unfunded mandates stood at $22.0 billion.

Total AUM ended the year at $1.80 trillion, up 8% from $1.66 trillion. In the fourth quarter alone it rose only $3.5 billion. Net market change, distributions and other took off $11.3 billion, and cash management outflows took off $6.0 billion. Together they offset the long-term inflows.

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Why it matters

OptimistFi has argued that Franklin Templeton must stabilize fee revenue and rebuild margins. A full year of positive flows and a wider margin supports both points. By OptimistFi's calculation, fiscal-year long-term net flows improved by $181.5 billion from the prior year.

Operating revenues rose 7% to $9.42 billion from $8.77 billion. Investment management fees, the largest line, rose to $7.48 billion from $6.98 billion. Operating income climbed 95% to $1.18 billion from $604.1 million.

Total operating expenses rose 1% to $8.24 billion. Amortization of intangible assets fell 51% to $198.4 million. Impairment charges dropped to $33.0 million from $226.6 million. The year-earlier fourth quarter alone carried a $202.2 million impairment, which makes that quarter's comparison easy.

The company said it returned $1.2 billion to shareholders through dividends and share repurchases. It held $7.4 billion of cash and investments, including direct investments in consolidated investment products.

How reported and adjusted margins differ

The fourth-quarter operating margin was 14.6% on a reported basis and 31.8% on the company's adjusted basis. For the full year, the adjusted operating margin was 28.0%, up from 24.5%. The adjusted figure uses a smaller revenue base of $7.20 billion, which leaves out sales and distribution fees and part of investment management fees.

The adjusted measures also leave out acquisition-related items, intangible amortization and impairment. They exclude special termination benefits of $204.5 million for the year and $100.0 million of charges tied to major regulatory settlements. Adjusted net income was $1.64 billion, or $3.07 a share, against $1.20 billion, or $2.22, in fiscal 2025.

A holder should treat the 12.5% reported margin as the cleaner test of how much of each revenue dollar reaches operating profit. Even so, it is well below the adjusted figure.

What's next

Johnson, Co-President Daniel Gamba and Co-President and CFO Matthew Nicholls lead a live teleconference on Nov. 6 at 11:00 a.m. Eastern Time. A replay is available through Nov. 13. Their answers on fixed income, the only long-term asset class with net outflows in the quarter, bear on how broad the flow recovery is.

The next quarterly report would weaken the case if long-term net flows turn negative again or if the reported margin slips back toward last year's level. It would strengthen the case if positive flows continue in a quarter when market changes subtract from AUM.

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