Franklin Templeton expands suite of actively managed ETFs

Oct 7th, 2016 | By | Category: ETF and Index News

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California-based asset manager Franklin Templeton Investments has expanded its suite of actively managed exchange-traded funds on the Franklin LibertyShares platform with the launch of two new funds – the Franklin Liberty US Low Volatility ETF (NYSE: FLLV) and the Franklin Liberty Investment Grade Corporate ETF (NYSE: FLCO).

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

“Building on the success of our Franklin LibertyShares ETF platform launch earlier this year, we are pleased to reach another milestone by introducing our new suite of actively managed ETFs,” said Patrick O’Connor, Global Head of ETFs for Franklin Templeton Investments.

“Investors have embraced the ETF wrapper for its benefits, which may include liquidity, tax efficiency and transparency,” he continued. “Now they want the opportunity to seek better risk-adjusted returns over the long term. Through Franklin LibertyShares, we are providing investors with simple and efficient options to help them address their desired outcomes. Our actively managed ETFs can help investors meet their investment needs by serving as a core or complementary portfolio holding.”

The Franklin Liberty US Low Volatility ETF seeks to beat the performance of the Russell 1000 Index while emphasising lower volatility than the broad US equity market. The fund applies a “bottom up” research process to identify stocks with strong fundamental characteristics and low realized volatility scores, relative to their corresponding sectors. The fund has a total expense ratio (TER) of 0.50% due to a contractual fee waiver in place until September 2017. The gross expense ratio is 0.70%.

As of 5 October 2016 the ETF has 87 holdings of which the largest has a 1.6% allocation. Major sector exposures include information technology (20.7%), financials (13.2%), healthcare (12.8%), consumer discretionary (12.6%) and industrials (11.3%).

The Franklin Liberty Investment Grade Corporate ETF seeks to provide a high level of current income and will invest at least 80% of its net assets in investment grade corporate debt securities. It aims to outperform the Bloomberg Barclays US Aggregate Credit – Corporate – Investment Grade Index. The fund has a cap of 40% of its net assets allowed to be invested in securities issued outside of the US, and up to 15% of its net assets in non-US dollar denominated securities. It has a TER of 0.40% due to a contractual fee waiver in place until September 2017. The gross expense ratio is 0.83%.

As of 5 October 2016 the ETF has 54 holdings of which the largest has a 2.7% allocation. Geographically, there is currently a 64.5% allocation to North America, 12.8% to Europe and 4.1% to Asia.

The funds join the Franklin Liberty Short Duration US Government ETF (NYSE: FTSD), an active ETF launched in 2013.

O’Connor added: “Our actively managed ETF offerings leverage Franklin Templeton’s extensive expertise and resources as a premier fundamental, active investment manager. Our world-class global research platform integrates the insights of over 650 investment professionals, including seasoned equity and fixed income professionals, to allow us to take a holistic approach in evaluating each company or debt instrument. Our ability to combine our research prowess, with the attractive benefits of an ETF structure, is our competitive advantage.”

Franklin LibertyShares platform of strategic beta and actively managed ETFs has approximately $324m in assets under management.

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