Franklin Templeton converts two mutual funds to ETFs

Nov 3rd, 2022 | By | Category: Equities

Franklin Templeton has converted two actively managed mutual funds providing exposure to US large-cap value and global ex-US growth investment strategies into fully transparent ETFs.

Patrick O’Connor, global head of ETFs at Franklin Templeton Investments.

Patrick O’Connor, Global Head of ETFs at Franklin Templeton Investments.

The BrandywineGLOBAL–Dynamic US Large Cap Value ETF (DVAL US) houses $180 million in assets and comes with an expense ratio of 0.65%, while the Martin Currie Sustainable International Equity ETF (MCSE US) has $30m in assets and costs 0.75%.

Both funds have been listed on Nasdaq.

DVAL and MSCE are sub-advised by Franklin Templeton affiliates Brandywine Global Investment Management and Martin Currie, respectively.

Patrick O’Connor, Global Head of ETFs at Franklin Templeton, said: “These two funds represent our first mutual-fund-to-ETF conversions. Leveraging the deep expertise and focus of our independent specialist investment managers, these two funds have historically delivered exceptional results and diversification potential for clients. Now we are excited to continue to offer these investment strategies within the attractive and popular ETF vehicle.”

DVAL is overseen by portfolio managers Henry Otto, Steven Tonkovich, and Michael Fleisher who have all managed Brandywine’s US large-cap value strategy since its inception in 2007.

The fund selects its constituents from the large-cap Russell 1000 Index based on Brandywine’s proprietary quantitative analysis into valuation, quality, and market sentiment factors. The strategy dynamically shifts between two factor-based models depending on prevailing market conditions.

The strategy has returned 8.86% per annum since its inception, notably outperforming the benchmark Russell 1000 Value Index which gained 5.76% per annum over the same period.

MCSE, meanwhile, is led by portfolio managers Ken Hughes and Zehrid Osmani who have managed the strategy since 2015 and 2018, respectively.

The ETF consists of a high-conviction portfolio of non-US companies with a history of high and sustainable returns on invested capital over time. The fund maintains the flexibility to invest across sectors, geographies, and market capitalizations, managing risk on an absolute basis without regard to any specific benchmark.

Since its inception in 2015, the strategy has also notably outperformed its benchmark, delivering a return of 3.82% per annum compared to 2.61% for the MSCI All Country World ex-US Index.

Franklin Templeton’s US ETF platform now consists of 58 funds with a combined AUM of approximately $9 billion across active, smart beta, and traditional passive strategies.

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