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Top Portfolio Products: Franklin Templeton's First Strategic Beta ETFs

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New products and changes introduced over the last week include a suite of strategic beta ETFs from Franklin Templeton; an inverse ETF from Direxion; advisory changes for a Vanguard fund; and subadvisor changes for a Touchstone fund.

In addition, Franklin Square launched a feeder fund and Schwab Stock Plan Services enhanced its mobile capabilities.

Here are the latest developments of interest to advisors:

1) Franklin Templeton Launches LibertyShares, Strategic Beta ETFs

Franklin Templeton Investments launched LibertyShares, its first foray into the strategic beta arena. This new line of business with LibertyQ includes three multifactor core portfolio funds and one fund that focuses on stocks with high and persistent dividend income.

The ETFs use proprietary LibertyQ indexes constructed using four factors (quality, value, momentum and low volatility) designed to pursue lower volatility and higher risk-adjusted returns over the long term.

The Franklin LibertyQ Global Equity ETF (FLQG) has an expense ratio of 0.35% and tracks the LibertyQ Global Equity Index, which seeks higher risk-adjusted returns than the MSCI ACWI Index.

Franklin LibertyQ Emerging Markets ETF (FLQE), with an expense ratio of 0.55%, tracks the LibertyQ Emerging Markets Index, which seeks higher risk-adjusted returns than the MSCI Emerging Markets Index.

The Franklin LibertyQ International Equity Hedged ETF (FLQH) has an expense ratio of 0.40% and tracks the LibertyQ International Equity Hedged Index. It seeks higher risk-adjusted returns than the MSCI EAFE Index.

The Franklin LibertyQ Global Dividend ETF (FLQD), with an expense ratio of 0.45%, tracks the LibertyQ Global Dividend Index, which offers exposure to high-quality, dividend-oriented stocks.

2) Direxion Adds Inverse ETF

Direxion launched another inverse ETF, this one not leveraged. It’s called the Direxion Daily S&P 500 Bear 1X Shares (SPDN), and it seeks investment results, before fees and expenses, the inverse of the performance of the S&P 500 Index. The ETF’s net expense ratio is 0.45%.

3) Vanguard Makes Advisory Changes for Active Equity Fund

Vanguard has removed Sterling Capital Management LLC as an advisor to the Explorer Value Fund (VEVFX). It had managed 31% of the fund. That responsibility will now be shared equally between Frontier Capital Management and Cardinal Capital Management.

Investment objectives and principal investment strategies of the small- and mid-cap value will remain the same, and the expense ratio is also not expected to change.

4) Touchstone Names Copper Rock Subadvisor

Touchstone Investments named Copper Rock Capital Partners subadvisor to its Touchstone Emerging Markets Small Cap Fund (TEMAX, TEFCX, TEMYX, TMEIX).

Copper Rock seeks to take advantage of inefficiencies across market capitalization and geographies to generate alpha for clients. David Shea and Stephen Dexter will be the fund’s portfolio managers.

5) Franklin Square Adds Feeder Fund

Franklin Square Capital Partners launched a feeder fund for the FS Global Credit Opportunities Fund (FSGCO), an unlisted closed-end fund. The feeder fund, FS Global Credit Opportunities Fund–T (FSGCO–T), features a commission structure designed to be responsive to FINRA Regulatory Notice 15-02 by lowering upfront commissions and increasing the amount of capital available for investment.

FSGCO seeks to generate a high level of total return by investing in value-based and event-driven opportunities in a broad range of debt securities in North American and western European markets. FSGCO is managed by an affiliate of Franklin Square and subadvised by GSO Capital Partners LP.

6) Schwab Stock Plan Services Beefs Up Mobile Capabilities

Schwab Stock Plan Services launched a series of initiatives to enable participants in the employee stock option plans (ESOPs) it handles to deal with their equity compensation.

The enhanced mobile app, available for iPhone, iPad, Android and Kindle, provides detailed account summary and balance information, as well as the ability to review vesting details and to track purchased, exercised or unexercised shares. Also available are biometric account access and expanded service access.

Read the June 6 Portfolio Products Roundup at ThinkAdvisor.


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