Franklin Templeton adds Taiwan to suite of passive EM country ETFs

Mar 22nd, 2022 | By | Category: Equities

ETF STRATEGY NEWS! ETF Strategy is delighted to announce the launch of ETF Strategy Hub (hub.etfstrategy.com), an on-demand repository of webcasts, videos, podcasts and white papers. Debuting with Special Series on Technology & Innovation in China and the Digital Economy.


Franklin Templeton has expanded its suite of single-country, emerging market ETFs with the launch of a new fund targeting equities listed in Taiwan.

Caroline Baron, Head of ETF Sales EMEA, Franklin Templeton.

Caroline Baron, Head of ETF Business Development, EMEA, Franklin Templeton.

The Franklin FTSE Taiwan UCITS ETF has been listed on London Stock Exchange in US dollars (FLXT LN) and pound sterling (FRXT LN) as well as on Deutsche Börse Xetra (FLXT GY) and Borsa Italiana (FLXT IM) in euros.

Taiwan represents the second-largest country exposure within the FTSE Emerging Market Index, making up 18.2% of the index’s total market capitalization as of the end of February.

The country is also a key region for the global semiconductor industry, accounting for approximately two-thirds of the market share worldwide amongst semiconductor foundries (companies that manufacture chips for other companies).

Semiconductors are key strategic assets for the 21st century with demand being spurred by several technological themes including the rise of 5G, artificial intelligence, electric and autonomous vehicles, and the metaverse.

The ETF tracks the FTSE Taiwan 30/18 Capped Index which comprises the large- and mid-cap segments of Taiwan’s stock market. Constituents are weighted by float-adjusted market capitalization while capping the largest stock at 30% and any other stock at 18% in a bid to promote diversification.

Reconstitution and rebalancing occur semi-annually, while capping is applied on a quarterly basis.

As of the end of February, technology stocks accounted for nearly two-thirds (60.2%) of the total index weight, followed by companies in the financials (16.6%) and industrials (7.3%) sectors.

Taiwan Semiconductor had reached the index cap limit of 30%, while the next-largest single stock exposures were MediaTek (5.5%), Hon Hai Precision (4.2%), and United Microelectronics (2.1%).

The fund comes with an expense ratio of 0.19%, making it the cheapest dedicated Taiwan ETF in Europe and 74% lower than the average EM single-country UCITS ETF within the same Morningstar category.

Commenting on the launch, Caroline Baron, Head of ETF Business Development, EMEA, Franklin Templeton, said: “We are delighted to introduce this new Taiwan passive ETF at the lowest fee to European investors. Taiwan is home to some of the most technologically advanced companies globally and continues to offer attractive investment prospects, given its market leadership in high-growth sectors like electronic circuits, automation, and semiconductors.”

Julian Ide, Head of EMEA distribution, Franklin Templeton, added: “Franklin Templeton has more than 35 years of deep expertise in emerging market investing, and we are very pleased to add Taiwan to our single-country ETF product suite. Offering greater choices to investors via low-cost emerging market ETFs will further enable our clients to use them as building blocks to diversify their portfolios.”

Franklin Templeton offers a further four EM single-country ETFs in Europe providing exposure to the equity markets of Brazil, China, South Korea, and India. They are the $30m Franklin FTSE Brazil UCITS ETF (FVUB LN), $250m Franklin FTSE China UCITS ETF (FRCH LN), $390m Franklin FTSE Korea UCITS ETF (FLRK LN), and $100m Franklin FTSE India UCITS ETF (FRIN LN).

The ETFs linked to Brazil, China, and India also come with expense ratios of 0.19%, while the South Korea ETF comes in at just 0.09%, reflecting its more advanced and liquid capital market.

The suite offers investors a robust toolkit to manage their emerging markets exposure with Brazil, India, China, South Korea, and Taiwan collectively accounting for around three-quarters of the total market capitalization of the FTSE Emerging Markets Index.

Caroline Baron added: “Our single-country ETFs allow investors to tailor their emerging market allocations rather than follow the country weights of broader emerging market indices where China could account for more than 35%. By having access to our single-country ETF portfolio suite, investors can take a more targeted approach towards emerging markets and match the specific needs of their portfolio.”

Tags: , , , , , , ,

Leave a Comment