Industry Updates

Climate ETF fee war heats up as Franklin Templeton joins Lyxor in slashing charges

The ETF issuer cut fees on two ETFs but reductions could only last until Q2 2022

Tom Eckett

a chess board with pieces

Franklin Templeton has aggressively reduced the charges on a climate ETF and a fixed income ETF but the cuts could only last until Q2 2022.

The Franklin S&P 500 Paris Aligned Climate UCITS ETF (500P) has seen its total expense ratio (TER) reduced from 0.15% to 0.07% until 31 May 2022 while the Franklin Liberty Euro Short Maturity UCITS ETF (FRXE) has been cut by 10 basis points to 0.05% until 30 June 2022.

A Franklin Templeton spokesperson said in a statement: “As part of our ongoing efforts to bring cost-effective investment solutions to European clients, we will review the TER for both ETFs in 2022 and update investors accordingly.”

500P is now the joint-cheapest climate ETF on the European market. It was the cheapest until last week when Lyxor cut fees on its S&P 500 Paris-Aligned Benchmark (PAB), the Lyxor Net Zero 2050 S&P 500 Climate PAB UCITS ETF (PABU), from 0.20% to 0.07%.

500P was launched in July 2020 following the release of the European Union's two climate benchmarks in November 2019, the PAB and the Climate Transition Benchmark (CTB).

The PAB, which 500P is aligned with, targets a carbon intensity reduction of 50% versus the parent universe and a minimum 7% decarbonisation yearly reduction.

Meanwhile, FRXE, which launched in June 2018, is an actively-managed ETF that is run by the firm’s head of European fixed income David Zahn.

The ETF offers exposure to euro-denominated short-duration bonds and is benchmarked against the ICE BofA 0-1 Year Euro Broad Market index.

Featured in this article

Logo for LyxorLogo for Franklin Templeton