Franklin Templeton launches active US Treasuries ETF

Jun 12th, 2020 | By | Category: Fixed Income

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Franklin Templeton has expanded its suite of actively managed fixed income ETFs in the US with the launch of a fund providing exposure to Treasury securities.

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

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

The Franklin Liberty US Treasury Bond ETF (FLGV US) has listed on NYSE Arca and comes with a net expense ratio of 0.09% after the application of a fee waiver.

Its gross expense ratio is 0.59%.

The fund, which is benchmarked against the Bloomberg Barclays US Aggregate Government Treasury Index, may invest across the maturity spectrum but will primarily focus on maturities between one and 30 years.

The fund’s prospectus indicates that the fund will be conservatively managed, seeking to closely track its benchmark while providing income that is distributed to investors on a monthly basis.

The fund will, however, retain the flexibility to drive alpha, primarily through duration and yield-curve positioning, and may employ derivatives in this regard.

The fund will also seek to boost returns through limited allocations to a wide range of other fixed income securities including Treasury Inflation-Protected Securities (TIPS), agency mortgage-backed securities, and other US government and agency-guaranteed securities.

Franklin Templeton’s investment team combines fundamental research and a proprietary, machine-learning ranking system to identify opportunities.

Patrick O’Connor, Global Head of ETFs for Franklin Templeton, commented, “The launch of FLGV further exemplifies our steadfast belief that active management is critical to achieving investor goals in fixed income.

“Franklin Templeton Fixed Income has engineered a seamless active quant approach—where portfolio managers, analysts, traders and data scientists work as one team to create a synergistic loop between quantitative and fundamental analysis. We believe marrying our time-tested fundamental expertise and data science insights gives us a competitive edge in navigating challenging investment environments to best serve our clients.”

Franklin Templeton now offers nine actively managed fixed income ETFs listed in the US covering US government, municipal, investment-grade corporate, high-yield corporate, senior loan, and aggregate bond exposures.

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