Franklin Templeton CEO warns rising capital costs will slow activities

Franklin Templeton CEO Jenny Johnson is sounding the alarm on what higher capital costs mean for the broader economy. In short: banks are getting pickier, borrowing is getting harder, and companies that need financing are being forced to look elsewhere.

Johnson, who has led the $1.7 trillion asset management giant since February 2020, pointed to the post-Silicon Valley Bank regulatory environment and elevated interest rates as the twin forces squeezing traditional lending. Banks, she noted, now treat capital as “expensive and precious.”

The lending squeeze and what’s filling the gap

Franklin Templeton’s own numbers tell the story. The firm reported $18.4 billion in long-term net inflows for its fiscal third quarter of 2026, with alternative assets under management hitting a record $294.2 billion. Through the first three quarters of fiscal 2026, private markets fundraising reached $33.0 billion, already surpassing the firm’s annual targets with a quarter still to go.

Total long-term net inflows for the same nine-month period came in at $63.3 billion.

How Franklin Templeton got here

Johnson’s warning isn’t abstract corporate commentary. It’s context for a strategic bet that Franklin Templeton has been making for years. The firm’s AUM has grown from roughly $717 billion in 2018 to approximately $1.66 trillion in 2026, a trajectory driven in large part by acquisitions and expansion into alternative investments.

Johnson, who was named to Fortune’s “Most Powerful Women” list in 2026, has steered the firm through a period of dramatic industry consolidation. The playbook has been consistent: diversify beyond traditional mutual funds and fixed income into alternatives, where fee structures are richer and client relationships tend to be stickier.

What this means for markets

The sustained high yields in credit markets reflect this dynamic. Lenders can demand more because borrowers have fewer options.

There’s a risk embedded in this trend, though. Private credit markets are less transparent and less liquid than public debt markets. When traditional banks pull back and private lenders fill the void, credit risk doesn’t disappear. It migrates to corners of the financial system with less regulatory oversight and fewer disclosure requirements.

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