Franklin Templeton launches new Catholic Principles ETF for European investors

Franklin Templeton is pleased to announce the launch of its new Catholic Principles Emerging Markets Sovereign Debt UCITS ETF within its Franklin LibertySharesTM range, the first
of its kind in the European market. This launch brings the number of article 8 and 9 EU SFDR compliant strategies to seven in the range.

This new Article 83 Smart Beta ETF is based on the ICE BofA Diversified Emerging Markets External Debt Sovereign Bond Index and invests in Euro and US dollar-denominated sovereign debt issued by emerging market countries.

It excludes bonds issued by countries that score poorly on the following criteria identified by the index provider as Roman Catholic principles: governments’ moral integrity, social justice, abolition of the death penalty and care for the planet based on environmental, social, and governance rating data. The new ETF additionally adjusts its security weightings to reduce its overall carbon footprint relative to the Index.
The Franklin Catholic Principles Emerging Markets Sovereign Debt UCITS ETF will list on the Deutsche Börse Xetra (XETRA) on 28 June, Borsa Italiana on 30 June and the London Stock Exchange (LSE) on 1 July. The ETF will be registered in the UK, Austria, France, Germany, Ireland, Italy, Spain and the Nordics.

“We are delighted to introduce this new Sustainable Sovereign Debt ETF at the lowest fee to European investors. With this offering, we have created a custom-made index and partnered with an ethical advisor to ensure clients have access to a distinct ETF backed by the scale and resources of Franklin Templeton. The combination of Catholic values-based exclusions and a screening process for decarbonisation opportunities from the ETF’s investable universe should subsequently appeal to a broad range of investors seeking to widen their portfolio of sustainable investments.”

Caroline Baron, Head of ETF Business Development, EMEA, Franklin Templeton

Competitive fees

The ETF will provide European investors with cost-efficient, UCITS-compliant, emerging market sovereign debt exposure aligned with Roman Catholic principles and offers the lowest total expense ratios (TER) at 0.35% in Europe (TER is on average 11% lower than other emerging market debt UCITS ETFs) for its respective category.

“This new ETF offers investors a broader opportunity set within emerging market debt. Despite lower yields among developed market bonds, many emerging market countries have low debt-to-GDP ratios whilst still providing higher yields than their developed market counterparts. Additionally, emerging market bonds have had relatively low correlations to equities when compared to traditional asset classes, so allocating to this ETF may help enhance overall portfolio diversification.”

Rafaelle Lennox, Vice President, Senior ETF Product Specialist, Franklin Templeton

The new ETF will be managed by London-based John Beck, senior vice president and director of Global Fixed Income for Franklin Templeton Fixed Income.

Franklin LibertySharesTM, Franklin Templeton’s global ETF platform, enables investors to pursue their desired outcomes through a range of active, smart beta and passive ETFs. Supported by the strength and resources of one of the world’s largest asset managers, the global ETF platform has more than $12 billion in assets under management globally as of 31 May 2022.