Franklin Templeton launches active multi-asset long/short ETF

Dec 24th, 2019 | By | Category: Alternatives / Multi-Asset

Franklin Templeton has expanded its actively managed line-up with the addition of its first alternative ETF.

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

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

The Franklin Liberty Systematic Style Premia ETF (FLSP US) has listed on NYSE Arca with seed capital of $10 million.

The fund seeks to deliver absolute return – positive performance in both rising and falling markets – while maintaining a relatively low correlation with traditional markets.

It aims to achieve these goals by allocating assets across two underlying investment strategies – a top-down risk premia strategy and a bottom-up long/short equity strategy.

The top-down risk premia strategy focuses on value, momentum, and carry factors in taking both long and short positions across equity, fixed income, commodity, and currency markets. The fund will typically use derivatives to obtain the desired exposure.

The bottom-up long/short equity strategy focuses on quality, value, and momentum factors in determining whether to hold long or short positions in individual equity securities.

The ETF will seek to maintain equal risk contributions between the two strategies while targeting portfolio annualized volatility below 8%.

Patrick O’Connor, Global Head of ETFs for Franklin Templeton Investments, commented, “We are thrilled to bring our first alternative ETF to the market. FLSP is unique due to our intentional focus on building an alternative investment while seeking to minimize any correlation to traditional equity and fixed income asset classes.

“We find investors need tools to help mute or dampen volatility and to find more consistent returns across market cycles or in times of market stress. FLSP looks to address those challenges, and many others, in a low-cost, liquid ETF.”

The fund comes with an expense ratio of 0.65% and distributes income to investors on a semi-annual basis.

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