Franklin Templeton unveils new fixed-income ETFs

The active, currency-hedged funds are designed to help investors and advisors navigate the credit markets

Franklin Templeton unveils new fixed-income ETFs

Franklin Templeton Investments Canada has launched three new active, CAD-hedged fixed-income ETFs on the TSX: the Franklin Liberty Global Aggregate Bond ETF (FLGA), Franklin Liberty Senior Loan ETF (FLSL) and Franklin Liberty U.S. Investment Grade Corporate ETF (FLUI).

“The fixed income market is becoming increasingly more complex in this low interest rate environment,” said Duane Green, president and CEO, Franklin Templeton Investments Canada. “To help investors and advisors navigate the credit markets, we have introduced three fixed income ETFs that employ an active approach to security selection, with currency hedging to manage risk—all at a low cost.”

The new funds will employ the expertise of the Franklin Templeton Fixed Income Group, a team of over 150 dedicated professionals across the globe. With over 40 years of experience in fixed-income portfolio management, the team is responsible for more than US$164 billion in fixed-income AUM.

Consistent with prudent investment management, FLGA seeks to maximize total returns consisting of capital appreciation and interest income. Co-managed by John Beck, director of Fixed Income-London, SVP and portfolio manager, and Warren Keyser, SVP and portfolio manager, the fund will do this by investing primarily in investment-grade fixed- or floating-rate debt securities from governments, government-related entities, and corporations worldwide.

FLSL aims to provide a high level of current income coupled with capital preservation through investment made primarily in senior secured income-producing floating rate corporate loans made to, and corporate debt securities from US and non-US entities. The fund will be co-managed by Mark Boyadjian, director of Floating Rate Debt Group, SVP and portfolio manager; Madeline Lam, VP and portfolio manager; and Justin Ma, VP and portfolio manager.

Finally, FLUI also seeks a high level of current income and capital preservation, but it invests primarily in US dollar-denominated investment-grade corporate debt securities from US and non-US entities. It will be co-managed by Shawn Lyons, VP and portfolio manager, and Marc Kremer, VP and portfolio manager.

FLGA and FLUI both come with a management fee of 35 bps, while FLSL has a management fee of 45 bps. The three new offerings join the Franklin Liberty Canadian Investment Grade Corporate ETF (FLCI), which is managed by Franklin Bissett Investment Management.

“This suite of ETFs will provide investors with the essential building blocks for the fixed income component of a portfolio," said Patrick O'Connor, head of Global ETFs, Franklin Templeton Investments.