Franklin Resources (BEN): Market Rally Correlation Analysis
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Based on the comprehensive data analysis, I will now provide a detailed report on the correlation between market rally performance and Franklin Resources’ fee-based revenue growth and profitability.
Franklin Resources, Inc. (NYSE: BEN), a global investment management company, demonstrates a strong positive correlation between market rally performance and its fee-based revenue growth and profitability. The analysis reveals that as global equity markets rebounded significantly from October 2024 to January 2026, Franklin Templeton experienced substantial improvements in AUM, management fees, and profitability metrics.
| Index | Performance (Oct 2024 - Jan 2026) | Volatility |
|---|---|---|
S&P 500 |
+21.04% | 1.09% |
NASDAQ Composite |
+30.46% | 1.42% |
Dow Jones Industrial |
+16.11% | 0.99% |
Russell 2000 |
+19.42% | 1.40% |
The U.S. equity markets demonstrated robust recovery and expansion throughout the analysis period, with technology-focused indices (NASDAQ) outperforming broader market measures. This favorable market environment provided significant tailwinds for asset managers like Franklin Resources [0][1].
Franklin Resources’ stock demonstrated strong performance aligned with market rallies:
| Period | Return | Relative Performance |
|---|---|---|
| 1 Month | +8.47% | Outperforming |
| 3 Months | +13.66% | Outperforming |
| 6 Months | +6.46% | Outperforming |
| 1 Year | +28.44% |
Significantly Outperforming |
| YTD | +8.74% | Outperforming |
The stock’s Beta of 1.47 indicates higher volatility than the market, suggesting amplified returns during market rallies but potentially greater drawdowns during corrections [0].
Franklin Resources maintains a highly fee-dependent business model, with investment management fees comprising approximately
| Revenue Category | Amount (USD Million) | % of Total | YoY Change |
|---|---|---|---|
Investment Advisory, Management & Administrative Services |
$1,847.9 | 79.4% | +2.7% |
Sales and Distribution Fees |
$388.7 | 16.7% | +3.5% |
Shareholder Service Fees |
$70.9 | 3.0% | +11.7% |
Other Revenue |
$19.6 | 0.8% | +47.4% |
Total Operating Revenues |
$2,327.1 | 100.0% | +3.3% |
The dominance of management fees as the primary revenue source creates a direct linkage between AUM levels and company profitability. When market values rise, AUM increases proportionally, driving fee revenue higher without corresponding increases in variable costs [0][1].
Statistical analysis reveals strong correlations between key performance metrics:
| Metric Pair | Correlation Coefficient | Interpretation |
|---|---|---|
| AUM ↔ Revenue | 0.6410 |
Strong positive correlation |
| AUM ↔ Management Fees | 0.7438 |
Very strong positive correlation |
| Net Flows ↔ Revenue | -0.1331 | Weak negative (short-term noise) |
The high correlation between AUM and management fees (0.74) confirms that market appreciation directly translates to fee revenue growth, as management fees are typically calculated as a percentage of assets under management [0].
| Quarter | Operating Revenue | Net Income | Operating Margin | YoY Net Income |
|---|---|---|---|---|
| Q4 FY2024 | $2,251.6M | $163.6M | 9.7% | — |
| Q1 FY2025 | $2,251.6M | $151.4M | 9.5% | -7.5% |
| Q2 FY2025 | $2,111.4M | $92.3M | 6.9% | -47.2% |
| Q3 FY2025 | $2,064.0M | $42.7M | 7.5% | -76.8% |
| Q4 FY2025 | $2,343.7M | $117.6M | 3.6% | -28.1% |
Q1 FY2026 |
$2,327.1M |
$255.5M |
12.1% |
+68.8% |
The Q1 FY2026 results demonstrate the transformative impact of sustained market rallies on profitability. Net income surged 68.8% year-over-year, while operating margin expanded to 12.1% from 9.7% in Q1 FY2024 [1].
- Net Income: $255.5 million (+56% YoY, +117% QoQ)
- Diluted EPS: $0.46 (+59% YoY, +119% QoQ)
- Adjusted Net Income: $378.4 million (+18% YoY)
- Adjusted Operating Margin: 25.0% (vs. 24.5% YoY)
The significant QoQ improvement in net income (117%) reflects the compounding effect of market appreciation on fee revenues, combined with disciplined expense management [1].
| Metric | Q1 FY2024 | Q1 FY2026 | Change |
|---|---|---|---|
Ending AUM |
$1,530.2B | $1,684.0B | +10.1% |
Average AUM |
$1,512.5B | $1,676.1B | +10.8% |
AUM growth during the analysis period was driven by:
- Long-term Net Inflows: $28.0 billion in Q1 FY2026 (vs. $50.0 billion net outflows in Q1 FY2024)
- Market Appreciation: Positive investment performance across equity, multi-asset, and alternative strategies
- Strategic Acquisitions: $6.1 billion from Apera Asset Management acquisition
The transition from net outflows to consistent net inflows represents a critical turnaround:
| Quarter | Long-term Net Flows |
|---|---|
| Q4 FY2024 | ($50.0B) |
| Q1 FY2025 | ($15.8B) |
| Q2 FY2025 | +$25.2B |
| Q3 FY2025 | +$18.5B |
| Q4 FY2025 | ($11.9B) |
Q1 FY2026 |
+$28.0B |
CEO Jenny Johnson stated: “Long-term net inflows were $28.0 billion, with record AUM and positive net flows across equity, multi-asset and alternatives strategies, as well as ETFs, retail SMAs and Canvas®” [1].
The ETF platform reached a new high with
Alternative fundraising remained a key growth contributor:
- Q1 FY2026 Fundraising: $10.8 billion (including $9.5 billion in private market assets)
- Lexington Co-Investment Partners VI: Closed with $4.6 billion in committed capital
- Lexington AUM: $83 billion (46% increase since 2022 acquisition)
- Benefit Street Partners: $95 billion AUM (U.S. and European alternative credit)
- Clarion Partners: $75 billion in real estate AUM
These alternative assets typically carry higher fee structures than traditional equity products, enhancing overall profitability margins [1].
The correlation between market rallies and Franklin Resources’ performance operates through multiple channels:
Market Rally → Higher Asset Values → Increased AUM → Higher Management Fees → Improved Profitability
| Metric | Q1 FY2024 | Q1 FY2026 | Change | Correlation Signal |
|---|---|---|---|---|
| Operating Revenue | $2,106.4M | $2,327.1M | +10.5% | Confirms positive correlation |
| Management Fees | $1,620.5M | $1,847.9M | +14.0% | Strongest correlation driver |
| Net Income | $150.9M | $255.5M | +69.3% | Amplified by operating leverage |
| Operating Margin | 9.5% | 12.1% | +2.6 pts | Improving efficiency |
Given Franklin’s Beta of 1.47, the stock’s performance is expected to be amplified relative to market movements. During the analyzed market rally period, the company’s operational leverage magnified the impact of rising markets on profitability, as fixed costs are spread across a larger revenue base [0].
While the current market environment has been favorable, Franklin Resources remains highly sensitive to market conditions:
- Bearish MACD Signal: Technical indicators show no clear upward momentum
- Sideways Trend: Current trading range of $25.30-$26.16 suggests consolidation
- Analyst Consensus: HOLD rating with price target of $25.00 (slightly below current levels) [0][1]
The asset management industry faces structural challenges including:
- Fee compression across traditional products
- Growing passive investment alternatives (index funds, ETFs)
- Distribution channel consolidation
| Finding | Evidence | Implication |
|---|---|---|
Strong AUM-Revenue Correlation |
0.74 correlation coefficient | Market rallies directly boost fee income |
Management Fees as Primary Driver |
79.4% of revenue | Business model highly sensitive to market values |
Profitability Multiplier Effect |
Net income +69.3% vs. revenue +10.5% | Operating leverage amplifies market benefits |
AUM Growth from Multiple Sources |
$28B net inflows + $6.1B acquisitions | Diversified growth supports fee revenue |
Margin Expansion During Rally |
Operating margin up 2.6 pts YoY | Scale benefits improving cost efficiency |
Franklin Resources demonstrates a strong positive correlation between market rally performance and its fee-based revenue growth and profitability. The analysis confirms that:
-
Revenue-AUM Linkage: The 0.74 correlation between AUM and management fees validates that market appreciation directly translates to revenue growth.
-
Profitability Amplification: Net income growth (+69.3%) significantly outpaced revenue growth (+10.5%) during the market rally period, demonstrating positive operating leverage.
-
Strategic Positioning: The company’s expansion into higher-margin alternative assets and ETFs enhances its ability to capture market rally benefits while diversifying fee revenue streams.
-
Sustained Momentum: Nine consecutive quarters of positive net flows (on a comparable basis excluding Western Asset) indicates structural improvement in client acquisition beyond market-driven AUM growth.
The market rally from late 2024 through early 2026 has been a significant catalyst for Franklin Resources’ financial performance, with the company’s fee-based business model effectively converting market appreciation into improved profitability.
[0] 金灵AI金融数据库 - Franklin Resources (BEN) 公司概况、技术分析与市场数据
[1] SEC Filing - Franklin Resources, Inc. Form 8-K (January 30, 2026) - https://www.sec.gov/Archives/edgar/data/38777/000003877726000032/ben-20260130.htm
数据基于历史，不代表未来趋势；仅供投资者参考，不构成投资建议
关于我们：Ginlix AI 是由真实数据驱动的 AI 投资助手，将先进的人工智能与专业金融数据库相结合，提供可验证的、基于事实的答案。请使用下方的聊天框提出任何金融问题。