Franklin Resources: Steady Beat in F3Q26 With Margins Heading Higher; Another Quarter of Positive Net Sales and Stable Fee Rates; Upside From Private Markets Fundraising

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Franklin Resources: Steady Beat in F3Q26 With Margins Heading Higher; Another Quarter of Positive Net Sales and Stable Fee Rates; Upside From Private Markets Fundraising

rength in demand across all Q2 0.47 0.71A 0.78

key strategies. Note, Lexington is currently undertaking its flagship fundraising Q3 0.49 0.72A 0.85

(Lexington XI), which seems poised to deliver solid fundraising results. Following Q4 0.67 0.78 0.86

FY 2.21 2.92 3.24

the F3Q26 earnings release, our F2026 estimates increase by 5c and our Dec-26 PT

is $34. Style Exposure

• Revenue ahead, performance + catch-up fees helps; overall fee rates

stable. Franklin reported adj. revenues of $1.82bn in F3Q26, ahead of our

model. Performance fees were $74mn in F3Q26, down from $87mn in F2Q26.

Catch-up fees during the quarter were $14mn, and F4Q26 is expected to

include a similar level of catch-up fees. F3Q26 adj effective fee rates (excl.

performance fees) were 37.9bps, roughly in line with F2Q26’s 37.8bps. Better

markets and positive net sales have been supportive in stabilizing the headline

fee rate. Moreover, the addition of higher fee products in private markets are

driving incremental mix benefits as well. Here, Franklin’s private markets

assets generate average fee rates of ~65bps, and range between 40-100bps+.

Looking ahead, Franklin expects F4Q26 fee rates to range in the mid/high-37s

bps. JPM Research: Tracking the

• Solid overall flows. F3Q26 total LT inflows were $18.4bn (vs. F2Q26’s Traditionals

$16.9bn), delivering a consecutive quarter of positive net sales for Franklin.

F3Q26 delivered flows improvement q/q across both equities and fixed

income, while multi-asset and alternatives continued to deliver steady positive

net sales. Notably, equity flows inflected positive to inflows of $2.0bn in