By Mark McSherry
Franklin Templeton said it has launched three new emerging markets funds following demand from clients.
These are the actively-managed Luxembourg-registered Templeton Emerging Markets Ex-China fund, and two Ireland-domiciled passively managed UCITS ETF, the Franklin FTSE Emerging ex-China UCITS ETF and the Franklin FTSE Emerging Markets UCITS ETF.
The Templeton Emerging Markets Ex-China fund will aim to invest in emerging markets companies across the world, excluding China, with attractive fundamental characteristics using a valuation aware approach.
The fund will be actively managed and “have a high conviction portfolio of 40-60 stocks constructed with a bottom-up approach and long-term outlook.”
It will be co-managed by Singapore-based Chetan Sehgal and Edinburgh-based Andrew Ness, portfolio managers at Franklin Templeton Emerging Markets Equity (FTEME) team. The fund is registered in France, Germany, Italy, Spain and United Kingdom.
Ness said: “We’re currently at an interesting juncture for emerging markets.
“With China making up a large portion of the MSCI EM Index, we also see a large opportunity set in countries outside of China such as Brazil, India, South Korea and Taiwan, which are producing leading companies benefitting from rising domestic consumption and those that are powering the global economy.
“There are strong investment opportunities such as offline and online consumer companies, banking, rising healthcare players and technology to name a few. These opportunities are underpinned by structural growth drivers such as consumer penetration, demographics and digitalisation.”
Franklin Templeton is one of the largest asset managers with dedicated emerging markets expertise, with over $44 billion managed across the firm in emerging markets assets.
Both the Franklin FTSE Emerging ex-China UCITS ETF and Franklin FTSE Emerging Markets UCITS ETF will offer “a cost-effective and flexible way to access broad and diversified exposure to large and mid-capitalisation stocks at a TER of 0.11% at launch.”
These passive ETFs will respectively track the performance of FTSE Emerging ex China Index NR (net return) and FTSE Emerging Index NR. They will be managed by Dina Ting, Head of Global Index Portfolio Management, and Lorenzo Crosato, ETF Portfolio Manager.
Franklin Templeton said: “The ETFs will list on the Deutsche Börse Xetra (XETRA) with tickers EMGM and EXCN on 23 October 2024, London Stock Exchange (LSE) and the Borsa Italiana on 24 October 2024.
“Furthermore, they are registered in France, Germany, Italy, Luxembourg, Spain and the United Kingdom. These new products will complement the Emerging Markets ETF suite we currently offer, especially on the single-country side, and will empower investors to custom build their portfolios at a cost-efficient price point.”
Jaspal Sagger, Global Head of Product, Franklin Templeton, said: “Our market and client research has demonstrated that many clients are looking to customise their allocations to China.
“We are delighted that clients are now able to manage their Chinese equity exposure separately through these two new ex-China funds alongside our dedicated China-only products.
“We also recognise that not all clients wish to manage their China allocation separately and prefer to simply seek broad emerging markets exposure. In this regard, the new Franklin FTSE Emerging Markets UCITS ETF (an indexed ETF) complements the firm’s comprehensive offering of actively managed emerging market products.”
Matt Harrison, Head of Americas (ex-US), Europe & UK, Franklin Templeton, said: “Building on Franklin Templeton’s rich heritage in emerging markets, we are delighted to introduce these three new emerging markets solutions to investors.
“Our goal is to provide our clients with many different tools and precision exposures as they seek to construct diversified portfolios; these tools include the choice of approach, style, and vehicle that best suit their objective.
“These strategies are a significant addition to our range, enabling Investors to implement their allocation preference on the emerging markets side.”