Franklin Resources is buyingrival investment managerLegg Mason for $4.5 billion, the latest shakeup in an industry grappling with customers who continue to clamor for lower fees.

Franklin Resources Inc., which operates as Franklin Templeton, said Tuesday that it will pay $50in cash for each Legg Mason Inc. share, which is 23% higher than they were trading before the holiday weekend. It will also assume about $2 billion in outstanding debt.

The deal will create a company with a combined $1.5 trillion in assets under management across stocks, bonds and alternative investments. Besides significant size, the deal would also provide the combined company with better diversification. Analysts called it a win-win deal and Wall Street saw it the same way.

Shares of both Franklin Resources and Legg Mason jumped in morning trading even as the rest of the market turned lower.

“This is a landmark acquisition for our organization that unlocks substantial value and growth opportunities driven by greater scale, diversity and balance across investment strategies, distribution channels and geographies,” said Greg Johnson, the executive board chairman at Franklin Resources.

A key share owner of Legg Mason has already given its support of the deal. Nelson Peltz’s Trian Fund Management LP and funds managed by it, own about 4.5% of Legg Mason’s outstanding stock after buying into the company last year and adding two members to its board.

The combined company will operate as Franklin Templeton and be headquartered in San Mateo, California. It anticipates approximately $200 million in annual cost savings.

Legg Mason, based in Baltimore, has investment affiliates that operate under their own brands, such as Western Asset and ClearBridge Investments. They will continue to operate with autonomy after the combination, but the management of one affiliate, EnTrust Global, will buy back its business.

The deal, which was approved by the boards of both companies, is expected to close no later than 2020′s third quarter.

The fund industry has transformed over the last decade as investors increasingly move away from funds run by traditional stock-picking managers. They’re opting instead for funds that simply track the S&P 500 and other indexes.

Last year, investors pulled $204 billion out of funds whose managers try to pick only the best U.S. stocks, according to Morningstar. Over the same time, they poured nearly $163 billion into funds that passively track U.S. stock indexes. The trend is replicating across many different types of funds, including foreign stock funds and some bond funds.

Index funds have lower fees than those with teams of analysts doing deep research on which stocks or bonds will beat the rest of the market. But even within actively managed funds, investors are more focused than ever on lowering their costs. Dollars are increasingly concentrated in funds with the lowest fees, which adds more downward pressure on fund companies’ profits.

Across the industry, stock mutual funds held on to $55 of every $10,000 invested in 2018 to cover fees and expenses. That’s down from $100 15 years earlier, according to the Investment Company Institute.

Shares of Legg Mason surged 23.6% in morning trading after the deal’s announcement, while Franklin Resources rose 5.1%.

(AP)