On Monday, Franklin Templeton expanded its library of exchange-traded funds with the launch of five new ETFs. Each fund provides a distinctly different approach to building exposure to municipal securities.
First on the docket is the Franklin Municipal Income ETF (FTMU). FTMU seeks to generate significant current income that is exempt from federal income tax and consistent with preservation of capital. The fund has a net expense ratio of 30 basis points.
Primarily, FTMU looks to invest in munis of investment-grade quality and an intermediate or long duration. However, the fund may allocate a smaller portion of assets towards junk bonds rated BB or higher.
Meanwhile, the Franklin Municipal High Yield ETF (FTMH) focuses on the high yield muni space. This fund aims to provide resonating income that is exempt from federal income tax. FTMH’s expense ratio sits at 0.35%.
Much like FTMU, FTMH looks to focus on munis with an intermediate to long duration. The fund obviously prioritizes investing in high yield bonds, but may invest in investment-grade securities as well.
For those looking for a shorter duration, the Franklin Short-Term Municipal Income ETF (FTMS) may be able to help. FTMS’s goal is to give its investors strong income, exempt from federal income tax, while being consistent with preservation of capital. The fund has a net expense ratio that sits at 20 basis points.
True to its name, FTMS focuses its investments towards munis that have short-term maturities. Primarily, the fund focuses on investment-grade securities.
Specialized Offerings
The Franklin New York Municipal Income ETF (FTNY) offers a bit of a more specialized approach. FTNY’s objective is to provide income that is exempt from not only federal income tax, but also personal income tax from both New York State and City. The fund’s net expense ratio of 0.35%.
Under normal circumstances, at least 90% of FTNY’s income is expected to be exempt from the aforementioned taxes. However, the remaining 10% of the fund’s income may be subject to such taxes.
Last but certainly not least is the Franklin California Municipal Income ETF (FTCA). FTCA seeks to generate income exempt from both federal income tax and California personal income tax. This fund’s expense ratio is positioned at 35 basis points.
Much like FTNY, FTCA looks to focus at least 90% of its income to be exempt from both of those taxes. Additionally, the remaining 10% of fund assets could be exposed to those taxes.
“We have seen strong interest in actively managed municipal bond ETFs in 2025 from the advisor community,” adds Todd Rosenbluth, Head of Research at VettaFi. “It is great to see Franklin Templeton leverage more of their in-house expertise to build out their ETF lineup.”
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