On filing an updated prospectus with the Securities and Exchange Committee, fund manager Franklin Templeton looks to be positioning to launch its first exchange traded fund.
According to the filing dated August 1, 2013, the actively managed Franklin Short Duration U.S. Government ETF will hold investment-grade U.S. government and agency securities with an average portfolio duration of 3 years or less. The fund will also hold mortgage-backed securities.
Additionally, the ETF can hold certain interest rate-related derivative transactions to obtain net long or short exposure to selected interest rates or durations. They will primarily be used to hedge risk.
The old breed of actively managed ETFs do not use derivatives. The SEC only recently lifted its moratorium on derivative usage in ETFs last December. [Active ETFs May Boom After SEC Lifts Derivatives Ban]
The active ETF will be listed on the NYSE Arca, but no ticker symbol has been provided. The fund has a 0.30% expense ratio.
Franklin Templeton is one of many other large mutual fund managers that have sought SEC exemptive relief for ETFs, including T. Rowe Price, Legg Mason and Federated Investors, reports Joe Morris for Ignites. But they have not pulled the trigger yet. [Mutual Fund Companies Readying Active ETFs]
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Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.