Franklin Templeton Investments has expanded its suite of LibertyShares actively managed exchange traded funds, recently launching a global ex-U.S. equity strategy to help investors target international opportunities.
The new Franklin Liberty International Opportunities ETF (NYSEArca: FLIO) comes with a 0.64% net expense ratio.
“The launch of Franklin Liberty International Opportunities ETF marks our first actively managed international ETF and continuing expansion of our LibertyShares offerings,” Patrick O’Connor, Global Head of ETFs for Franklin Templeton Investments, said in a note. “With over 75 percent of the world’s GDP coming from countries outside the U.S., investing internationally can provide portfolio diversification, which can reduce overall risk. As we believe successful international investing can benefit from combining a global investment perspective with local presence and insights, we are leveraging fundamental research from our local asset management and emerging markets teams around the world in managing this new ETF.”
FLIO is managed by Stephen H. Dover, Senior Vice President of Advisors and portfolio manager at Franklin Templeton, and Purav A. Jhaveri, Portfolio Manager of Advisers and portfolio manager at Franklin Templeton.
The new ETF will invest in equity securities of developed, developing and frontier markets outside the U.S. across the entire market capitalization spectrum, according to the prospectus sheet. The exposure to the various regions and markets will vary depending on the investment managers’ opinions on the prevailing conditions and prospects for these markets.
Regions and country weights may include Africa; Australia; Canada; Latin America; Europe (including the United Kingdom); Asia (including Japan, Korea, China and India); and the Middle East.
The managers may also even include a currency-hedged component to limit foreign exchange risks. According to the prospectus, the fund may “enter into certain derivative transactions, principally currency forward contracts; currency futures contracts; equity futures contracts (including equity index futures contracts); and options, including equity options (including equity index options). These derivatives may be used to enhance Fund returns, increase liquidity, gain exposure to certain instruments or markets in a more efficient or less expensive way and/or hedge risks associated with its other portfolio investments.”
FLIO’s investment managers will apply a “bottom up,” fundamental long-term approach that focuses on the market price of a company’s securities relative to the investment managers’ evaluation of the company’s long-term earnings, asset value and cash flow, favoring those that are financially strong with favorable growth potential and sustainable competitive advantages, when determining allocations. Additionally, other considerations may include a company’s price-to-earnings ratio, profit margins and liquidation value.
Current regional weights include Europe 44.5%, Asia 37.6%, North America 8.5%, Mid-East/Africa 2.4%, Latin America 2.1% and Australia/New Zealand 1.9%.
Top sector weights include industrials 18.5%, financials 15.1%, consumer discretionary 14.3%, information technology 11.8% and health care 8.1%. Top holdings include Tencent Holdings 2.8%, BPost 2.5, Anheuser Busch Inbev 2.1%, WisdomTree India Earnings Fund (EPI) 2.1% and Samsung Electronics 2.0%.
For more information on new fund products, visit our new ETFs category.