Franklin Templeton Launches Three New Active Fixed Income ETFs for European Investors

Franklin Templeton launches three new ETFs on the London Stock Exchange

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David Zahn, Head of European Fixed Income, Franklin Templeton

• Two of the new ETFs, classified as Article 9 under EU SFDR, will invest in green bonds and support the transition to a low-carbon future

Franklin Templeton is pleased to announce the launch of three new active fixed income ETFs – Franklin Sustainable Euro Green Sovereign UCITS ETF, Franklin Sustainable Euro Green Corp 1-5 Year UCITS ETF and Franklin Euro IG Corporate UCITS ETF . These new funds extend the total number of active ETFs to six , while 13 ETFs are now classified under SFDR as Article 8 or 9, which now represent more than half of the overall Franklin Templeton ETF range. These new ETFs provide exposure to bonds that support the transition to a low-carbon future.

David Zahn, Head of European Fixed Income, Franklin Templeton, commented: “Having launched the first active European green bond ETF over 4 years ago, we continue to see significant growth opportunities, with Europe remaining a cornerstone in the global green bond market with cumulative issuance totalling €331 billion last year. The launch of the Franklin Sustainable Euro Green Sovereign UCITS ETF and the Franklin Sustainable Euro Green Corp 1-5 Year UCITS ETF continue to expand our Green bond offering to better address client needs. Our new green bond strategies seek to generate attractive risk-adjusted returns while providing liquidity to projects with environmental benefits.”

The new funds will be managed by Franklin Templeton’s European Fixed Income team with significant expertise in sustainable fixed income investments.

2 Euro Green bond ETFs – Objectives

The investment objective of the Franklin Sustainable Euro Green Sovereign UCITS ETF, classified as Article 9 under EU SFDR, is to pursue a sustainable investment objective by providing exposure primarily to the European sovereign green bond market, whilst maximising total returns.

Meanwhile, the Franklin Sustainable Euro Green Corp 1-5 Year UCITS ETF, also classified as Article 9, will pursue a sustainable investment objective by providing exposure to the European corporate green bond market with a short to mid duration of less than 5 years, whilst maximising total returns.

Both Green Bond ETFs seek to achieve their investment objectives by investing at least 90% of assets in sustainable investments and will invest at least 75% of assets in green bonds, with the balance made up of conventional bonds, which are deemed by the portfolio management team to be sustainable investments. By investing in this manner, the new ETFs expect to provide liquidity to new and existing climate-aligned projects with environmental and social benefits.

1 Euro IG Corporate ETF – Objective

The investment objective of the Franklin Euro IG Corporate UCITS ETF is to provide income from the European corporate bond market while seeking to preserve capital. Classified as Article 8 under EU SFDR, the fund will primarily invest in Euro denominated investment grade corporate debt securities issued by European companies and has at least 20% of its assets invested in environmental sustainable investments and 1% in social sustainable investments.

Caroline Baron, Head of ETF Distribution, EMEA, Franklin Templeton, commented: “We are pleased to offer European investors a diversified range of competitively priced sustainable active ETFs, which include providing a sovereign bond solution with flexible duration and a shorter maturity corporate green bond strategy, the only active ETFs in these segments.”

Competitive fees

With a total expense ratio (TER⁵) of 0.18⁶% for Franklin Sustainable Euro Green Corp 1-5 Year UCITS ETF and Franklin Sustainable Euro Green Sovereign UCITS ETF and 0.15⁷% for Franklin Euro IG Corporate UCITS ETF, the new ETFs will provide European investors with competitive fees amongst the lowest levels for sustainable solutions within their respective active categories in Europe.

Baron concluded: “We continue to see strong investor demand for sustainable active fixed income ETFs combining the merits of active management and the liquidity, accessibility and transparency benefits of the ETF wrapper.”

The new ETFs will list on the Deutsche Börse Xetra (XETRA) on 1^st November, the London Stock Exchange (LSE) on 2^nd November and the Borsa Italiana on 16^th November. They are registered in Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Spain, Sweden and in the UK.

Franklin Templeton’s global ETF platform enables investors to pursue their desired outcomes through a range of active, factor-based and passive ETFs. Supported by the strength and resources of one of the world’s largest asset managers, the global ETF platform has over $16 billion in assets under management globally as of 30 September 2023.

Source: ETFWorld