Franklin Resources: A Resilient Play in a Volatile Asset Management Landscape

The asset management industry is grappling with headwinds: bond fund outflows, rising interest rates, and shifting client preferences. Amid this turbulence, Franklin Resources (BEN) has positioned itself as a survivor—and perhaps even a beneficiary—through strategic acquisitions, diversification, and bold innovation. While recent declines in assets under management (AUM) and earnings have sparked concerns, the company's long-term playbook argues for patience. Let's dissect why Franklin could be a compelling buy for investors seeking exposure to a resilient, evolving asset manager.
Ask Aime: Could Franklin Resources (BEN) weather the storm amid bond fund outflows and rising rates?
The Power of Acquisitions: From Putnam to Pipeline Growth
Franklin's $925 million acquisition of Putnam Investments in early 2024 stands as its most significant move in years. The deal added $142 billion in AUM, boosting Franklin's total to $1.55 trillion as of late 2023. While AUM dipped slightly to $1.54 trillion in Q2 2025, the strategic benefits are undeniable. Putnam brought expertise in target date funds, stable value, and large-cap value strategies, while expanding Franklin's institutional presence in defined contribution plans—a sector critical to long-term growth.
Ask Aime: Why is Franklin Resources (BEN) poised for recovery despite AUM dips?
The acquisition also made Franklin a partner with Great-West Lifeco, which now holds a 6.2% stake in the firm, signaling confidence in Franklin's post-merger integration. CEO Jenny Johnson's focus on synergies—such as combining Franklin's multi-asset solutions with Putnam's retirement capabilities—has already started to pay off. Institutional pipelines, which totaled $20.4 billion as of Q2 2025, suggest future inflows may offset recent outflows.
Diversification Beyond Bonds: Alternatives and SMAs as Growth Drivers
Franklin's decline in fixed income assets—$30.5 billion in net outflows in Q2 2025—reflects broader industry struggles with rising rates. Yet the firm is countering this through alternatives and separately managed accounts (SMAs). Alternatives saw $6.4 billion in inflows, while retail SMA inflows hit a record $3.2 billion. These segments, which command higher fee structures (Franklin's fee rate improved to 38.3 basis points in Q2), are critical to offsetting margin pressure from lower-margin bond funds.
The 2022 acquisitions of Alcentra and Lexington further diversified Franklin's offerings, bolstering its private debt, real estate, and hedge fund capabilities. These moves align with a global trend toward alternatives, which now account for over $15 trillion in AUM globally and are expected to grow at a 9% CAGR through 2030. Franklin's early bets here position it to capitalize on this shift.
Blockchain: A Strategic Edge in the Digital Financial Future
While Franklin Resources' official disclosures on blockchain initiatives remain sparse, its subsidiary Franklin Templeton has quietly been a leader in integrating distributed ledger technology. In 2024, Franklin Templeton launched its money market fund on Coinbase's Base blockchain, becoming the first asset manager to do so, and expanded its tokenized assets onto networks like Stellar and Ethereum. These moves aim to improve liquidity, reduce settlement times, and attract crypto-savvy institutional investors.

Though not yet a core revenue driver, these experiments signal Franklin's recognition of blockchain's potential to disrupt traditional finance. As DeFi platforms mature, Franklin's early engagement could help it dominate the convergence of crypto and TradFi—a $1 trillion+ opportunity.
Valuation: A Discounted Opportunity in a Consolidating Sector
At a P/E ratio of 14.5x (versus the sector average of 16x) and a dividend yield of 1.8%, Franklin trades at a discount to its peers. Its price-to-book ratio of 1.1x reflects lingering concerns about AUM volatility, but this may be shortsighted.
Key catalysts ahead:
1. Synergy realization: Franklin expects the Putnam deal to be “modestly accretive” to earnings by late 2025, with cost savings and cross-selling opportunities.
2. Alternatives momentum: With $20.4 billion in institutional pipelines and rising demand for private debt and real estate, Franklin is well-positioned to reverse AUM declines.
3. Blockchain differentiation: Early adoption could create a competitive moat as institutional investors increasingly demand digital-first solutions.
Risks to Consider
- Market volatility: AUM growth hinges on equity markets, which remain sensitive to rate hikes and geopolitical risks.
- Regulatory headwinds: Blockchain initiatives face scrutiny, particularly around custody and compliance.
- Acquisition integration: Putnam's cultural and operational fit with Franklin remains unproven in the long term.
The Bottom Line: A Buy for Long-Term Resilience
Franklin Resources isn't a high-growth stock, but its portfolio of strategic acquisitions, diversification into high-margin alternatives, and early blockchain bets make it a defensive play in a consolidating industry. While short-term AUM dips and macro risks exist, the firm's balance sheet (with $2.2 billion in cash) and institutional pipeline suggest stability.
Investors seeking exposure to a manager that's adapting to both traditional and digital finance should consider adding BEN to a diversified portfolio, particularly at current valuations. This is a “wait for the storm to pass” stock—ideally bought during corrections, not market highs.
Historical performance analysis further supports this approach. A backtest evaluating Franklin Resources' (BEN) performance when purchasing on the announcement date of quarterly earnings releases and holding for 60 trading days from 2020 to 2025 shows an average return of 101.6%. However, this strategy carried significant risks, including a maximum drawdown of -48.96% and volatility of 29.44%. While the returns were positive, the Sharpe ratio of 0.48 highlights the suboptimal risk-adjusted performance. These findings suggest that while earnings-driven entry points may offer upside, investors should employ risk management tactics such as stop-loss orders or position sizing to navigate the inherent volatility.
In an industry where survival requires constant reinvention, Franklin's moves signal it's ready to weather the next decade's challenges.
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