Franklin Templeton to build asset-class agnostic ETF

Franklin Templeton to build asset-class agnostic ETF
Fund will use quantitative models to select investments from different asset classes.
AUG 02, 2019

Franklin Templeton has a wonky plan to simplify stock and bond allocations. The San Mateo, California-based asset manager wants to start a new exchange-traded fund that will invest in equities, debt, commodities and currencies — rather than allocating to one asset class, like more than 99% of U.S. ETFs, regulatory filings show. Instead, managers of the Franklin Liberty Systematic Style Premia ETF will actively evaluate an asset's characteristics — its value or momentum, for example — to determine what to buy. It's complicated stuff, and that's only part of the proposal. While half of the fund's capital will be used to seek out attractive opportunities regardless of asset class, the other half will follow a long/short equity strategy, weighing a stock's quality, value and momentum to decide whether to own or bet against it. While some other ETFs do pursue a similar approach, it's a style far more common among hedge funds. (More: Low-cost gold ETFs introduce new fiduciary challenge)​ The fund will be "seeking to profit by utilizing quantitative models to identify investment opportunities across different asset classes and markets," Franklin Templeton said in the filing. "By employing these two approaches, the investment manager seeks to provide positive absolute return over time while maintaining a relatively low correlation with traditional markets." Management fees for the fund were not disclosed. Chandra Seethamraju, the head of smart beta and overlay strategies for the quantitative part of the money manager's multi-asset solutions group, will run the ETF. (More: Leveraged and inverse ETFs may be too risky to sell, says state regulator group)​

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