Franklin Templeton has introduced a trio of actively managed fixed income ETFs in Europe catering to investors seeking alignment with environmental, social, and governance (ESG) criteria.
David Zahn, Head of European Fixed Income at Franklin Templeton.
Managed by Franklin Templeton’s European Fixed Income team, the new products include two funds that invest in green bonds issued by European sovereign or corporate entities, while the third delivers a comprehensive European corporate bond portfolio fortified with advanced sustainability standards.
The ETFs have made their debut on Deutsche Börse Xetra with upcoming listings also planned on the London Stock Exchange and Borsa Italiana.
With this new offering, Franklin Templeton has extended its active ETF line-up to six funds and bolstered its Sustainable Finance Disclosure Regulation (SFDR) classified offerings to 13, representing more than half of the asset manager’s entire ETF range in Europe.
David Zahn, Head of European Fixed Income at Franklin Templeton, commented: “Having launched the first active European green bond ETF over four years ago, we continue to see robust growth prospects, especially in Europe which remains a lynchpin in the global green bond arena with total issuance amounting to €331 billion last year.”
Caroline Baron, Head of ETF Distribution, EMEA, at Franklin Templeton, added: “We continue to witness strong investor appetite for sustainable active fixed income ETFs that offer the unique blend of active management within the accessible ETF structure.”
The ETFs
The Franklin Sustainable Euro Green Sovereign UCITS ETF (GSOV GY) is built around euro-denominated green bonds – bonds whose proceeds are specifically earmarked for projects with a direct environmental benefit – that have been issued by European government issuers. The Franklin Sustainable Euro Green Corp 1-5 Year UCITS ETF (GCOR GY), meanwhile, targets the European corporate green bond market while restricting its scope to bonds with a remaining maturity between one and five years.
Both of the above ETFs commit to deploying at least 75% of their capital in green bonds with the balance being invested in conventional bonds that meet the portfolio management team’s criteria for sustainability.
Each ETF comes with an expense ratio of 0.18% and is classified as Article 9 under SFDR.
The third offering, the Franklin Euro IG Corporate UCITS ETF (EIGC GY), invests in euro-denominated, investment-grade corporate debt, broadly diversifying across maturities. The strategy allocates at least 20% of the total assets to environmentally sustainable investments and another 1% to socially sustainable investments.
The fund is classified as SFDR Article 8 and has an expense ratio of 0.15%.