Smart Beta  

Franklin Templeton enters UK smart beta market

Franklin Templeton enters UK smart beta market

Franklin Templeton is to list a series of smart beta ETFs on the London Stock Exchange, making it the latest fund house to offer such products in the UK market.

Two of the asset manager’s four LibertyShares ETFs will focus on stocks that demonstrate “high and persistent dividend income” in Europe and globally.

The third product will focus on large and mid-cap US stocks, with the fourth ETF investing in global equities considered to be environmentally and socially responsible.

The funds will target their respective factors using indices constructed by Franklin Templeton. Charges on the products range from 0.25 to 0.45 per cent.

Martyn Gilbey, the firm’s UK country head, described the launch as a “significant milestone” that would allow clients greater choice in portfolio construction.

“[The launch] is all about giving clients investment choices, and as UK investors look for smarter ways to get returns on their money, their investment needs have evolved,” he said.

“Many investors have already embraced the ETF wrapper for its benefits, including low cost, liquidity, tax efficiency and transparency. We are therefore pleased to offer UK investors access to these new smart beta ETFs which complement our existing product range.”

Smart beta has become an important growth market for fund providers at a time of fee pressure for both active and passive products.

Several companies, including the likes of JPMorgan Asset Management, have moved into the space in recent years. The passives market has also seen some early signs of consolidation, with Invesco agreeing to buy Source - a provider of index trackers and smart beta products - earlier this year.

Despite this, some have tipped the wider ETF market to remain fragmented for some time. In the wake of the deal to buy Source, Invesco's chief executive predicted asset manager consolidation would fall back, arguing that people were “wise enough to know how difficult it is”.

Similarly, a report by Morningstar’s European passives research team said that although the structure of the European ETF industry made it ripe for consolidation, provider numbers were likely to grow rather than contract.