Franklin enters the core, actively
Franklin Templeton is listing an actively managed core bond ETF in the US, at an ultra low cost. The Franklin Liberty US Core Bond ETF (FLCB) will broadly track (but not attempt to outperform) the Bloomberg Barclays US Aggregate Bond index, which measures the total US bond market.
FLCB will use bottom up and top down analyses to pick debt securities from any US issuer. The fund will mostly invest in Treasuries, corporate bonds and mortgage backed securities, the prospectus indicates.
Also read: Franklin Templeton lists emerging market ETFs in Europe
The fund will aim to have market-like duration and sector risks. It charges 0.14% in the first two years, then 0.19% from June 2021.
Analysis - why not beat the benchmark?
FLCB offers a straightforward way to access the total US bond market. There are many, many, many total bond market ETFs, so by providing active management FLCB provides a unique selling point of sorts.
At 0.14% (for the first two years, at least), the fee is highly competitive. If I had a question for this fund it would be why it doesn't try and beat a benchmark.
The prospectus indicates the fund will maintain market like exposure (based on duration, sector, issuer, etc), in line with the Bloomberg Barclays US Aggregate Bond index. Yet FLCB will not try and beat the index. Why not give beating it a go?
Image: Franklin Templeton rings NYSE bell. Source: NYSE