Franklin Templeton has made its exchange-traded funds debut in Europe with the launch of four smart beta ETFs listed on the London Stock Exchange and Deutsche Börse’s Xetra

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

Branded as Franklin LibertyShares and linked to custom proprietary indices, the launch includes a pair of multi-factor ETFs, one of which is SRI focused, and a pair of quality dividend ETFs.

The San Mateo, California-headquartered company, which already has ETFs listed in the US and Canada, becomes the latest “big beast” asset manager to enter the European ETF market.

Its rival Fidelity made its debut in April earlier this year.

[pullquote]”Our first European offerings aim to help investors achieve specific investment outcomes such as strong risk-adjusted returns, lower volatility and downside protection”
– Patrick O’Connor, head of global ETFs, Franklin Templeton[/pullquote]Commenting on the launch, Patrick O’Connor, Franklin Templeton’s head of global ETFs, said: “Our strategic goal, three years in the making, has been to build a world class global ETF platform. Following successful launches in the US and Canada, we are very excited to bring our Franklin LibertyShares ETF platform to Europe. Our first European offerings aim to help investors achieve specific investment outcomes such as strong risk-adjusted returns, lower volatility and downside protection.”

Martyn Gilbey, UK country head at Franklin Templeton, added: “Liberty is all about giving clients investment choices, and as UK investors look for smarter ways to get returns on their money, their investment needs have evolved. Many investors have already embraced the ETF wrapper for its benefits, including low cost, liquidity, tax efficiency, and transparency. We are therefore pleased to offer UK investors access to these new smart beta ETFs which complement our existing product range. This is a significant milestone for us and will provide clients with additional investment solutions and choices to construct their portfolios.”

The four ETFs are linked to Franklin LibertyQ indices, which are constructed using an in-house proprietary model. The straight equity indices seek exposure to four factors (Quality, Value, Momentum and Low Volatility), while the dividend-focused indices seek exposure to securities with high and persistent dividend income along with superior quality characteristics.

The ETFs are as follows:

• Franklin LibertyQ Global Equity SRI UCITS ETF (FLXG) (TER 0.40%) tracks the LibertyQ Global Equity SRI Index, which is based on the MSCI ACWI SRI universe of large and mid-cap stocks across developed and emerging market countries. The index seeks exposure to Quality, Value, Momentum and Low Volatility factors in companies with strong sustainability profiles.The index currently has 232 constituents. The largest country weightings are the US (43.0%), Japan (9.4%), Australia (7.4%), Canada (6.3%) and the UK (5.8%). The largest sector exposures are financials (15.7%), consumer discretionary (13.9%) and health care (13.8%). The largest individual holdings are Gilead Sciences (1.3%), Biogen (1.2%) and Novo Nordisk (1.1%).
• Franklin LibertyQ U.S. Equity UCITS ETF (FLXU) (TER 0.25%) tracks the LibertyQ US Large Cap Equity Index, which is based on the Russell 1000 universe of US large-cap stocks. The index seeks exposure to Quality, Value, Momentum and Low Volatility.The index currently has 246 constituents. The largest sector exposures are information technology (20.5%), consumer discretionary (17.5%) and industrials (17.0%). The largest individual holdings are Gilead Sciences (1.3%), Boeing (1.2%) and Biogen (1.2%).
• Franklin LibertyQ Global Dividend UCITS ETF (FLXX) (TER 0.45%) tracks the LibertyQ Global Dividend Index, which is based on the MSCI ACWI ex REITs universe of large- and mid-cap stocks across developed and emerging market countries. The index seeks exposure to securities with high and persistent dividend income along with superior Quality characteristics.The index currently has 99 constituents. The largest country weightings are the US (36.8%), Australia (10.3%) and the UK (10.1%). The largest sector exposures are financials (23.5%), consumer staples (23.0%) and health care (15.9%). The largest individual holdings are Itau Unibanco (2.3%), Toronto-Dominion Bank (2.3%) and Bristol-Meyers Squibb (2.2%).
• Franklin LibertyQ European Dividend UCITS ETF (FLXD) (TER 0.25%) tracks the LibertyQ European Dividend Index, which is based on the MSCI Europe IMI universe of large-, mid- and small- cap stocks across developed market countries in Europe. The index seeks exposure to securities with high and persistent dividend income along with superior Quality characteristics.The index currently has 49 constituents. The largest country weightings are the UK (34.2%), Germany (13.0%) and Sweden (12.4%). The largest sector exposures are financials (34.0%), telecommunications (19.2%) and utilities (12.1%). The largest individual holdings are Telenor (4.0%), Allianz (3.5%) and Telia (3.4%).

Lida Eslami, head of ETPs business development at the London Stock Exchange, commented: “It’s exciting to welcome Franklin Templeton as they become the latest ETF issuer to access a diverse investor base and deep pool of liquidity through London Stock Exchange. We continue to see a very positive pipeline of issuers and products, cementing our position as a leading trading and listing venue for ETFs and other exchange-traded products.”

Martin Reck, Managing Director, Cash Market, at Deutsche Börse, said: “The primary listing of Franklin LibertyQ ETFs further expands our smart beta offering by adding multi-factor strategies. As there is currently very keen investor interest in Europe in these two types of strategy, the funds are an ideal supplement to our Xetra product range.”