Franklin Templeton has expanded its LibertyShares range with the launch of an emerging market sovereign debt ETF that scores well on Catholic values.

The Franklin Catholic Principles Emerging Markets Sovereign Debt UCITS ETF (EMCV) listed on the Deutsche Boerse on Tuesday. It will list on the Borsa Italiana on 30 June and the London Stock Exchange on 1 July with a total expense ratio (TER) of 0.35%.

EMCV is benchmarked against the ICE BofA Diversified Emerging Markets External Debt Sovereign Bond index and captures the performance of euro and US dollar-denominated sovereign debt from emerging markets.

It excludes bonds from issuers that score poorly on criteria identified by the index provider as Roman Catholic principles including the moral integrity of governments, social justice, abolition of the death penalty and care for the planet based on ESG data.

EMCV is labelled Article 8 under the Sustainable Finance Disclosure Regulation (SFDR) and adjusts its security weightings to have a lower carbon footprint than its parent index. 

The ETF will be managed by John Beck, senior vice president and director of global fixed income for Franklin Templeton Fixed Income.

Caroline Baron (pictured), head of ETF business development EMEA at Franklin Templeton, commented: “With this offering we have created a custom-made index and partnered with an ethical adviser to ensure clients have access to a distinct ETF backed by the scale and resources of Franklin Templeton.

The combination of Catholic values-based exclusions and a screening process for decarbonisation opportunities from the ETF’s investable universe should subsequently appeal to a broad range of investors seeking to widen their portfolio of sustainable investments.”

Rafaelle Lennox, vice president, senior ETF product specialist at Franklin Templeton, added: “Despite lower yields among developed market bonds, many emerging market countries have low debt-to-GDP ratios whilst still providing higher yields than their developed market counterparts.

“Additionally, emerging market bonds have had relatively low correlations to equities when compared to traditional asset classes, so allocating to this ETF may help enhance overall portfolio diversification.”

EMCV becomes the seventh SFDR Article 8 or 9 ETF in the Franklin LibertyShares range.

It follows the launch of the Franklin MSCI China Paris Aligned Climate UCITS ETF (PABC) earlier this month, the first Paris-aligned ETF with a sole China focus.

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