Franklin Templeton has expanded its US line-up of thematic ETFs with the introduction of the actively managed Franklin Exponential Data ETF (XDAT US) on Cboe BZX Exchange.
Matthew Moberg, CPA, Vice President & Portfolio Manager, Franklin Equity Group.
Aimed at US investors, the fund invests in companies focused on or expected to benefit from the use of big data and/or the growth of data, including the creation, collection, cleaning, analyzing, storage, securing, transport, and/or sale of data.
This includes, but is not limited to, cloud computing, data analysis, new security techniques, optical fibre, 5G, and datacentre and tower infrastructure.
The fund may also include companies believed to represent new and innovative use cases for data, such as those benefitting from or facilitating artificial intelligence, machine learning, and augmented and virtual reality.
“We believe the coronavirus pandemic has driven a long-term, structural acceleration of data transformation, improving the quality of businesses,” said Patrick O’Connor, global head of ETFs for Franklin Templeton. “As data continues to become increasingly important in our economy, the launch of XDAT showcases our continued efforts to remain nimble and adapt to the trends and needs of our clients in an evolving marketplace.”
The fund is managed by Matthew Moberg and Joyce Lin, portfolio managers within Franklin Equity Group. Both are located near Silicon Valley and have many years of experience investing in innovation stocks. In selecting holdings for the fund, the managers make use of bottom-up fundamental research conducted by dedicated, industry-specific analysts to identify companies positioned to capitalize on the theme.
The fund has launched with 50 holdings. The weighted-average market capitalization of holdings is $191.6 billion, although companies in the $25-50bn market capitalization segment contribute the largest proportion with a weight 38.84%. Whilst the fund has a global mandate, including being able to invest in emerging markets, it exhibits a strong US bias with 89% of holdings currently coming from the US. Notable positions include Pinterest (5.06%), Alphabet (5.05%), Snap (4.82%), Facebook (4.64%), and Twitter (3.38%).
Matt Moberg, senior portfolio manager, said: “In our view, the rapid adoption of technological solutions during the pandemic is just the beginning. As we come to terms with how to live in a post-pandemic world, data is becoming essential to running a business, and those who manage it well have a competitive advantage, especially in the age of socially distancing.”
The fund has been seeded with $2.5m and comes with a net expense ratio of 0.50%. It is benchmarked for performance measurement purposes against the Russell 3000 Index.
XDAT becomes Franklin Templeton’s fourth active thematic ETF. The others are:
Franklin Disruptive Commerce ETF (BUYZ US)
BUYZ invests in companies benefitting from or facilitating advancements in emerging areas of the e-commerce space that are enabling more convenient, customized, secure and time-efficient transactions for both consumers and businesses.
Franklin Genomic Advancements ETF (HELX US)
HELX invests in companies benefitting from or facilitating advancements of new genomic-based research techniques and technologies designed to extend and enhance the quality of human and other life, driven by the advent of cost-effective and rapid gene sequencing.
Franklin Intelligent Machines ETF (IQM US)
IQM invests in companies benefitting from or facilitating advancements of machine learning technologies in areas like robotics, driverless vehicles and algorithmic data analysis.
European investors looking for a similar sort of exposure to Franklin’s new fund might want to investigate the Xtrackers Artificial Intelligence & Big Data UCITS ETF (XAIX GY, XAIX SW) from DWS.
Listed on Xetra and SIX Swiss Exchange, XAIX tracks the Nasdaq Yewno Artificial Intelligence and Big Data Index, reflecting the performance of large, mid and small-cap companies from global developed and emerging markets that have material exposure to artificial intelligence, data processing and data security. Up to 100 companies are selected for inclusion with stocks weighted equally.