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Franklin Templeton has launched a new Catholic Principles Emerging Markets Sovereign Debt UCITS ETF within its Franklin LibertyShares™ range for European investors.
The firm said it is the first of its kind in the European market, and has been classified under Article 8 of the EU’s Sustainable Finance Disclosure Regulation. It 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.
The Article 8 ETF screens for securities meeting Roman Catholic principles and carbon reduction criteria. It listed on the Deutsche Börse Xetra on 28 June, Borsa Italiana on 30 June and the London Stock Exchange on 1 July. It will also be registered in the UK, Austria, France, Germany, Ireland, Italy, Spain and the Nordics, the firm said.
“We are delighted to introduce this new Sustainable Sovereign Debt ETF at the lowest fee to European investors,” Caroline Baron, head of ETF business development, EMEA, Franklin Templeton, said. “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,” she added.
The ETF will provide European investors with cost-efficient, UCITS-compliant, emerging market sovereign debt exposure aligned with Roman Catholic principles; it offers the lowest total expense ratios in Europe at 0.35 per cent for its respective category, the firm said.
“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,” Rafaelle Lennox, vice president, senior ETF product specialist, Franklin Templeton, added. “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,” Lennox said.
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 LibertyShares™, the firm’s global ETF platform, has more than $12 billion in assets under management globally as of 31 May 2022. The California-based investment manager also has $1.45 trillion in assets under management as of 31 May 2022.