Fund Management

Franklin Templeton Targets Food, Health And Wellness

Amanda Cheesley Deputy Editor 6 July 2023

Franklin Templeton Targets Food, Health And Wellness

With the world population set to hit 10 billion by 2050 and as populations live longer, California-based investment manager Franklin Templeton has launched two new sustainable, thematic exchange-traded funds (ETFs) for European investors.

Franklin Templeton has just launched the Franklin Future of Food UCITS ETF to help create innovation and investment into new technologies, in a bid to produce more food using fewer resources.

“By 2050, the global population will have increased by two billion to almost 10 billion, meaning that food production will need to increase by around 60 per cent,” Dina Ting (pictured), head of global index portfolio management at Franklin Templeton, said. 

The fund will be classified as Article 8 under the EU’s Sustainable Finance Disclosure Regulation (SFDR) with stock selection aligned to the UN Sustainable Development Goals. The fund tracks the performance of the Solative Sustainable Food Index which is designed to provide exposure to companies related to the food industry that use technology, efficient production and supply practices, and/or demonstrate innovation with the aim of creating a sustainable food ecosystem. 

Companies included represent industries such as agricultural machinery, smart farming, vertical farming, aquaculture and sustainable and healthy food, amongst others, and must be deemed by Institutional Shareholder Services (ISS), the world’s leading provider of corporate governance and responsible investment solutions, to be contributing to SDG 2 (Zero Hunger), SDG 9 (Industry, Innovation and Infrastructure), SDG 12 (Responsible Consumption and Production), SDG 13 (Climate Action), SDG 14 (Life Below Water) or SDG 15 (Life On Land).  

Smart farming or precision agriculture optimises crop productivity to help farmers produce more food using fewer  resources, and ensures that crops get precisely the treatment they need. Companies like AGCO Corporation design and manufacture agricultural machinery and precision agricultural technology, as well as Deere & Company, a US agriculture machinery manufacturer. Whilst vertical farming involves growing fruit and vegetables indoors all year round with LED lighting, using 95 per cent less water than traditional farms do. See articles on this subject here and here.

Franklin Future of Health and Wellness UCITS ETF 
The firm also launched the Franklin Future of Health and Wellness UCITS ETF, to respond to growing demand for more frequent medical care and wellness activities, as populations live longer. This creates potential to engage in healthcare innovation. “The wellness market is projected to grow from $4.4 trillion in 2020, or 5 per cent of global economic output, to $6.8 trillion by 2030,” Ting said.

This ETF, classified under Article 8 of the EU’s SFDR, tracks the performance of the Solactive Sustainable Health and Wellness Index, which is designed to provide exposure to those companies using technology and demonstrating innovation within the healthcare industry as well as companies that are enabling access to care, healthcare or wellness provision for a wide range of consumers including the elderly, the firm continued. This includes companies from areas such as genomics, medical imaging, e-healthcare, mind and body wellness, senior diseases and independent ageing recognised by ISS to be contributing to SDG 3 (Good Health and Wellbeing).

Any stock deemed to be significantly obstructing any of the 17 SDGs will not be eligible to join the indices, the firm said. Companies are additionally screened for specific ESG criteria, including, amongst others, board gender diversity and impact on biodiversity-sensitive areas.

The new offerings bring the total number of thematic ETFs to three and Article 8 SFDR compliant ETFs to 10 in the Franklin Templeton ETF range, as part of the firm's plans to grow its ETF business in Europe. See here.  

“We are delighted to have partnered with Solactive and ISS in the creation of these forward-looking solutions aligned to UN SDGs, providing investors with exposure to companies globally involved in innovative and sustainable practices across food and healthcare,” Rafaelle Lennox, head of UCITS ETF product strategy at Franklin Templeton, said.

The new ETFs will list on the Deutsche Börse Xetra (XETRA) on 6 July, the London Stock Exchange (LSE) on 7 July and the Borsa Italiana on 18 July. They are registered in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Spain, Sweden and the UK. The ETFs will be managed by Ting and Lorenzo Crosato, ETF portfolio manager at Franklin Templeton.

“These two new sustainable ETFs offer access to secular growth stories and by investing in innovative companies and potential disruptors have the potential to outperform traditional indices,” Caroline Baron, head of ETF distribution, EMEA, Franklin Templeton, added:

With a total expense ratio (TER) of 0.30 per cent, the firm said that the new ETFs will provide European investors with competitive fees amongst the lowest levels for sustainable solutions within their respective categories in Europe.

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