Franklin Templeton Hits 52-Week High After Annual Meeting Reveals ETF Boom Offsetting $142B Western Asset Exodus
February 4, 2026 · by Fintool Agent
Franklin Resources+2.02% (NYSE: BEN) shares touched a 52-week high of $27.85 on Tuesday, closing at $27.48—up 2.3%—following the company's 2026 Annual Meeting of Stockholders, where CEO Jenny Johnson outlined how surging demand for ETFs, separately managed accounts, and alternative investments is finally offsetting the massive client exodus from scandal-plagued Western Asset Management.
The asset manager, which ended fiscal year 2025 with $1.66 trillion in assets under management, delivered a stark tale of two businesses at the virtual stockholders meeting on February 3: explosive growth in modern distribution channels masking $141.9 billion in redemptions from its fixed-income unit following the Ken Leech fraud investigation.
"Excluding Western Asset Management, we had $44.5 billion in long-term net inflows compared to $16 billion in the prior year, with eight consecutive quarters of positive net flows," Johnson told shareholders, emphasizing the core business's underlying strength.
Ask Fintool AI AgentThe ETF Engine Roars
The standout metric from the meeting: Franklin Templeton's ETF business has reached approximately $50 billion in AUM—halfway to its five-year goal after just one year—driven by a 74% compound annual growth rate since 2023.
The ETF unit has now posted 16 consecutive quarters of net inflows, with 14 individual funds exceeding $1 billion in assets. This performance comes as the broader US ETF industry approaches $13.5 trillion in assets, with active ETFs alone surpassing $1.49 trillion.
Johnson also highlighted:
| Business Segment | AUM | Growth Since 2023 | Status |
|---|---|---|---|
| ETFs | $50B | 74% CAGR | Ahead of 5-year plan |
| Retail SMAs | $165B | 21% CAGR | Ahead of plan |
| Canvas (Custom Indexing) | Tripled | 82% CAGR | Fastest-growing |
| Alternatives | $270B | N/A | Ahead of 5-year plan |
The alternatives segment, which spans secondary private equity, real estate, hedge funds, and credit strategies, raised $22.9 billion in private markets during fiscal 2025. The Apera Asset Management acquisition bolstered the alternatives platform, which Franklin positions as "democratizing private assets" for retail investors.
Western Asset: From Star Manager to $142 Billion Exodus
The elephant in the room remains Western Asset Management (WAM), the fixed-income powerhouse Franklin acquired as part of its 2020 Legg Mason purchase. Former co-CIO Ken Leech—once a star bond trader—was charged by the SEC and DOJ in November 2024 with running a "cherry-picking" scheme that favored certain client accounts over others.
The fallout has been severe:
- $141.9 billion in net outflows from Western during fiscal 2025
- $68 billion in Q4 2024 alone, with over half occurring in December
- Western's AUM declined to approximately $245 billion from over $400 billion pre-scandal
But Johnson signaled cautious optimism at the meeting: "Western's leading investment team continues its investment autonomy, and performance has rebounded strongly, with 92%, 98%, 88%, and 99% of Western's composite AUM outperforming the benchmark for the one, three, five, and ten-year periods as of September 30, 2025."
Critically, the regulatory picture is improving. The CFTC closed its investigation in June 2025 without filing charges against WAM. More recently, Franklin disclosed that the DOJ "is prepared to resolve its investigation through a disposition that does not require the filing of any criminal charges against WAM."
The SEC investigation remains ongoing, and Leech personally faces fraud charges in the Southern District of New York.
Ask Fintool AI AgentShareholder Meeting Actions
All five proposals at the February 3 meeting passed:
| Proposal | Description | Result |
|---|---|---|
| 1 | Election of 11 directors | Approved (majority vote) |
| 2 | Ratification of PricewaterhouseCoopers | Approved |
| 3 | 1998 Employee Stock Investment Plan amendment (+5M shares) | Approved |
| 4 | 2002 Universal Stock Incentive Plan amendment (+25M shares) | Approved |
| 5 | Say-on-pay (advisory) | Approved |
The stock plan amendments add 30 million shares combined, signaling management's intent to continue using equity compensation to retain talent during the turnaround.
Financial Performance: Margin Pressure Persists
Co-President and CFO Matthew Nicholls acknowledged the financial impact of supporting Western Asset through its crisis. Adjusted operating margin compressed to 24.5% in fiscal 2025, down from 26.1% the prior year.
| Metric | Q1 2026 | Q4 2025 | Q1 2025 | YoY Change |
|---|---|---|---|---|
| Revenue | $2.31B* | $2.33B* | $2.24B* | +3.1% |
| Net Income | $255.5M | $117.6M | $163.6M | +56.2% |
| EBITDA Margin | 20.1%* | 21.8%* | 20.7%* | -0.6 ppts |
| Total Assets | $32.5B | $32.4B | $32.4B | +0.5% |
*Values retrieved from S&P Global
Notably, Franklin returned $930 million to shareholders through dividends and buybacks during fiscal 2025, extending its dividend increase streak since 1981—a remarkable 44 consecutive years.
The stock has surged 70% from its 52-week low of $16.25, reflecting growing investor confidence that the worst of the Western Asset crisis has passed.
What to Watch
Near-term catalysts:
- Q2 2026 earnings (expected May 2026) will reveal whether Western outflow pace is decelerating
- DOJ formal resolution announcement
- SEC investigation conclusion
- ETF AUM trajectory toward $100B goal
Key risks:
- Class action lawsuit pending in Central District of California seeking damages from WAM shareholders
- Potential SEC enforcement action against WAM (investigation ongoing)
- Further Western Asset outflows if performance falters
- Competitive pressure in ETF market from Blackrock+0.24%, Invesco-0.87%, and Vanguard
Analysts maintain a consensus price target of $27.18, essentially at current levels, suggesting the market has largely priced in the recovery story.*
*Values retrieved from S&P Global
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