Franklin Templeton is introducing two actively-managed fixed income ETFs in Europe.
The funds are registered in Germany and the UK and will be listed on the Deutsche Börse and the London Stock Exchange.
Franklin Liberty Euro Short Maturity Ucits ETF aims to provide income whilst maximising total returns in the euro-denominated short term fixed income market primarily by investing in European short-term debt securities and investments and is priced at 30bps.
The fund will be managed by London-based David Zahn, head of European fixed income (pictured) and Rod MacPhee, portfolio manager.
Franklin Liberty USD Investment Grade Corporate Bond Ucits ETF, meanwhile, aims to provide income from the USD fixed income market whilst seeking to preserve capital through investing primarily in US dollar denominated corporate debt securities issued by US and foreign companies and is priced at 35bps.
Assets are allocated among a range of market sectors with at least 80% being invested in fixed and floating rate investment grade corporate debt securities and investments.
The fund will be managed by New York-based Marc Kremer, portfolio manager and San Mateo-based Shawn Lyons, portfolio manager.
Caroline Baron, head of ETF sales EMEA, said: “Traditional debt-issuance weighted ETFs continue to grow in popularity but often face the challenge of being biased towards the biggest debtors or potentially suffering from the effects of ‘crowded trades’ as constituents of an index change”.
Actively managed ETFs have a benchmark index, but allow managers to change sector allocations or deviate from the index allowing more scope to manoeuvre in the event of rising interest rates and increased volatility. As a result, investment returns that do not perfectly mirror the underlying index.
David Zahn, head of European fixed income, said: “As active managers, we have the flexibility to pursue investment opportunities that are beyond the fund’s benchmark index to help identify the most attractive securities to invest in”.
