Franklin Templeton launches US fixed income ETF

Jul 28th, 2023 | By | Category: Fixed Income

Franklin Templeton has launched a new actively managed fixed income ETF on Nasdaq that seeks to capture alpha across multiple US debt markets.

Anujeet Sareen, Portfolio Manager at Brandywine Global

Anujeet Sareen, Portfolio Manager at Brandywine Global.

The BrandywineGLOBAL – US Fixed Income ETF (USFI US) is sub-advsied by Brandywine Global, a specialist investment manager of Franklin Templeton who has provided a range of differentiated fixed income, equity, and alternative solutions to clients since 1986.

In managing the ETF, Brandywine Global replicates its US Fixed Income institutional investment strategy which was launched in 1995 and has more than $3.2 billion in assets under management in separately managed accounts and other pooled vehicles (as of 30 June 2023).

The strategy seeks a total return by investing in Treasuries, government agency debt, municipal bonds, corporate bonds, and mortgage- and asset-backed securities of US issuers.

Eligible securities must be rated investment-grade and denominated in US dollars, and the portfolio typically aims to maintain a dollar-weighted duration below ten years.

Brandywine Global’s investment process is driven by a top-down, macroeconomic analysis of the business cycle to determine the strategy’s duration, sector, and quality exposures over time.

Security selection is then determined through bottom-up, fundamental analysis within the context of a value-oriented framework.

The ETF comes with an expense ratio of 0.39%.

Anujeet Sareen, Portfolio Manager at Brandywine Global, said: “A tumultuous 2022 capped years of low yields for fixed income. Now, that’s all changed, and the current environment provides a compelling opportunity for investors to reconsider their allocations to bonds. We believe our focus on active management and strategic portfolio decisions differentiates our approach to investing in US fixed income and offers an attractive complement to investors’ other portfolio allocations. Our active duration decisions, which rely on Brandywine Global’s top-down, macroeconomic-driven investment approach, combined with our bottom-up fundamental analysis of individual investment opportunities, will make USFI a valuable offering for ETF investors.”

Patrick O’Connor, Global Head of ETFs for Franklin Templeton, added: “Franklin Templeton continues to leverage the expertise of our specialist investment managers to develop products that meet investors’ needs and preferences and respond to changing dynamics in the greater investment landscape. A recurring topic of conversation with clients this year has been active fixed income ETFs. We believe fixed income is an area where active management shines, and we are excited to bring Brandywine Global’s nearly 30 years of experience in the US fixed income market to this new ETF.”

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