Franklin Templeton debuts ASX-listed active ETFs

US-headquartered investment giant Franklin Templeton has unveiled new actively managed equity and fixed income exchange traded funds (ETFs) on the Australian Securities Exchange (ASX).

The newly launched active ETFs give local investors access to two of the firm’s flagship managed funds: the Franklin Global Growth Fund (ASX: FRGG) and the Franklin Australian Absolute Return Bond Fund (ASX: FRAR).

Franklin’s equities-focused FRGG “uses fundamental bottom-up stock analysis”, it said, to identify and select a diversified portfolio of globally listed companies “with revenue streams that are not highly correlated”.

“We look globally for financially sustainable business models, and proven management teams that are focused on the creation of shareholder value. We utilise the results of this analysis to build a concentrated, best-ideas portfolio of 35 to 40 stocks,” said Francyne Mu, Franklin’s Global Growth Fund portfolio manager.

Franklin noted that FRGG outperformed its benchmark in the fourth quarter of 2023, with a strong information technology, consumer discretionary and financials sector stock basis adding to relative returns.

The fixed income-focused FRAR, which is dominated by corporate-investment grade investments, targets absolute returns over market cycles, Franklin said.

The FRAR aims to deliver returns in excess of the Bloomberg AusBond Bank Bill Index, after fees and expenses (but before taxes) over the short to medium term.

The Fund invests in a diversified portfolio of Australian and global fixed income securities.

“Through the listing of our fund on the ASX, we will be able to offer our unique approach to fixed income investing to a whole new range of investors who may not have been able to access strategies like these until now,” said Chris Siniakov, Franklin Templeton fixed income portfolio manager.

Franklin Templeton managing director and head of Australia and New Zealand Felicity Walsh noted that, by listing on the ASX, local investors will gain access to the “investment expertise and differentiated performance attributes of these funds through intraday-traded vehicles.”

She added: “These multi-distributed ETFs will complement our existing range of active ETFs which we manage in partnership with Betashares and further expand access to our premier suite of investment strategies.”

Unlike their passive predecessors, active ETFs require active management from portfolio managers or teams, who specify which underlying securities or stocks to hold and in what percentages, and the ongoing weighting of these investments.

The Active ETF continues to gain traction in Australia, with State Street predicting the entry of 10 new issuers this year that will leverage the dual registry/share class model.