Franklin Templeton enters UK smart beta market

Franklin Templeton will list series of smart beta products on the London Stock Exchange

Franklin Templeton, the leading US-based holdings company, is the latest addition to the list of fund houses offering smart beta products in the UK market. The asset manager will list a series of smart beta ETFs on the London Stock Exchange. The move by the company will give clients more choice in creating their portfolio.

While 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 and 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.

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

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

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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 and companies and more companies are entering the market. Companies like JPMorgan Asset Management have ventured into the sector in recent times.

There were signs of consolidation for the passive markets too, with Invesco agreeing to buy Source - a provider of index trackers and smart beta products.

Still, it is expected that the wider ETF market will 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, according to a report by Morningstar’s European passives research team, although the structure of the European ETF industry made it ripe for consolidation, provider numbers were likely to grow rather than contract.

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