Franklin Templeton plans entrance into smart beta ETF space

Jan 25th, 2016 | By | Category: Alternatives / Multi-Asset

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Californian asset manager Franklin Templeton Investments has filed papers with regulators signalling its intention to launch four equity exchange-traded funds with smart beta investment themes.

Franklin Templeton plan entrance into smart beta ETF realm

Franklin Templeton Headquarters, San Mateo, California. (© coolcaesar)

Details within the filings indicate that the new funds, which will be part of the firm’s “LibertyQ” range, will track rules-based indices calculated by MSCI.

The proposed strategies include currency-hedging as well as dividend-focused investing.

All funds will use non-traditional weighting schemes based on a range of factors including quality, value, momentum and volatility. Research has shown that such approaches to weighting index constituents has historically outperformed traditional approaches by avoiding the fundamental flaws in a market cap-weighted index, namely increasing the holdings of a stock as its price increases.

Franklin Templeton made its debut as an ETF issuer in November 2013 with the launch of the Franklin Short Duration US Government ETF (FTSD). These newest funds mark the firm’s first foray as an issuer of smart beta ETFs. Other firms which have entered the smart beta ETF space recently include Legg Mason, John Hancock and Goldman Sachs Asset Management.

The proposed funds filed with regulators by Franklin Templeton are:

Franklin LibertyQ International Equity Hedged ETF
Franklin LibertyQ Emerging Markets ETF
Franklin LibertyQ Global Dividend ETF
Franklin LibertyQ Global Equity ETF

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