Franklin Templeton launches active global growth ETF in Canada

Oct 6th, 2020 | By | Category: Equities

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Franklin Templeton has launched an actively managed ETF in Canada providing exposure to a high conviction portfolio of global growth stocks.

Duane Green, President and CEO, Franklin Templeton Investments Canada.

Duane Green, President and CEO, Franklin Templeton Canada.

The Franklin Global Growth Active ETF (FGGE CN) has listed on the Toronto Stock Exchange and comes with a management fee of 0.90%.

Duane Green, President and CEO, Franklin Templeton Canada, commented, “With the tremendous growth in US mega-capitalization technology stocks, investors are looking for compelling growth stocks to complement their portfolio.

“Our global growth strategy uncovers unique, high quality growth opportunities globally and seeks to limit economic overlap among holdings in the fund.”

The ETF gains its exposure by investing in the Franklin Global Growth Fund, a mutual fund with a performance record stretching back to 2001. This fund, which is managed out of Franklin’s New York office, is overseen by John Remmert, SVP, Don Huber, SVP, and Patrick McKeegan, VP, who collectively have 83 years of financial industry experience.

The strategy seeks long-term growth by investing in equity securities of companies from across the market cap spectrum and located anywhere in the world. Up to 20% of the fund’s assets may be allocated to emerging market stocks.

The managers combine a top-down macro analysis of global themes and sector developments with a strict bottom-up approach that seeks to identify firms whose growth prospects have yet to be recognized by the market. The portfolio is built around solid companies with sustainable competitive advantages that can signal exceptional growth potential.

Additionally, the prospectus notes the fund may enter into securities lending and repurchase agreements or engage in short selling. It may also temporarily use derivatives or invest all or a portion of its assets in cash and money market instruments for defensive purposes.

As of August month-end, the fund was approximately two-thirds (65.4%) allocated to companies in the US with the next largest country exposures being Australia (5.7%), Switzerland (4.9%), Canada (4.5%), and the Netherlands (3.0%).

It was tilted towards cyclical stocks with significant weights in the information technology (23.3%), consumer discretionary (18.1%), and industrials (15.6%) sectors. The more defensive sectors of healthcare (17.0%) and financials (16.1%) also played significant roles.

The fund’s 37 holdings were well-diversified at the security level with the largest holding – Salesforce.com – accounting for just 3.7%.

As of 30 September, the strategy was ahead of its benchmark, the MSCI World Index, over one-year (34.1% vs. 11.4%), three-year (17.7% vs. 10.1% – annualized), and five-year (15.3% vs. 10.4% – annualized) time periods (performance in CAD).

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