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Franklin Templeton Investments launches first suite of LibertyShares strategic beta ETFs


Franklin Templeton Investments has launched its LibertyQ, its first suite of LibertyShares strategic beta exchange traded funds (ETFs). 

The suite includes three multi-factor core portfolio funds and one fund that focuses on stocks with high and persistent dividend income. Franklin Templeton's strategic beta ETFs use proprietary LibertyQ indices, which are truly unique indices that have employed a research-driven approach in customising their factor weightings. The multi-factor LibertyQ indices are constructed with four factors – quality, value, momentum and low volatility – which together are designed to pursue lower volatility and higher risk-adjusted returns over the long term versus relevant cap-weighted benchmarks.

"Many of our clients have embraced the ETF wrapper for its benefits, including liquidity, tax efficiency and transparency, and now they are looking for more than what a traditional market cap-weighted index can offer," says Patrick O'Connor, head of Global Exchange Traded Funds for Franklin Templeton Investments. "LibertyQ offers investors our fundamental and quantitative expertise that drives our ability to seek specific outcomes with reduced risk, packaged within the ETF wrapper."

"Franklin Templeton strategic beta funds track the LibertyQ indices developed with Franklin Templeton's team of quantitative experts who have spent decades developing quantitative active equity strategies, coupled with academic research. We approached the creation of the LibertyQ indices in the same way we have approached quantitative stock selection, and we believe that, just as with discretionary stock picking, all factors are not created equal — some are more correlated to certain outcomes," adds O'Connor.

The three core multi-factor LibertyQ funds use LibertyQ indices that apply a truly unique approach of using custom factor weightings — quality (50 per cent), value (30 per cent), momentum (10 per cent) and low volatility (10 per cent) — in seeking to capture desirable, long-term performance attributes:

Franklin LibertyQ Global Equity ETF (NYSE: FLQG) tracks the LibertyQ Global Equity Index, which offers global equity exposure and seeks to achieve higher risk-adjusted returns than the MSCI ACWI Index.

Franklin LibertyQ Emerging Markets ETF (NYSE: FLQE) tracks the LibertyQ Emerging Markets Index, which offers broad emerging markets exposure and seeks to achieve higher risk-adjusted returns than the MSCI Emerging Markets Index.

Franklin LibertyQ International Equity Hedged ETF (NYSE: FLQH) tracks the LibertyQ International Equity Hedged Index, which offers international developed markets exposure and seeks to achieve higher risk-adjusted returns than the MSCI EAFE Index.

The index for Franklin LibertyQ Global Dividend ETF was constructed using proprietary dividend and quality screens, which account for not only long-term dividend sustainability and growth, but also for underlying balance sheet strength:

Franklin LibertyQ Global Dividend ETF (NYSE: FLQD) tracks the LibertyQ Global Dividend Index, which offers global exposure to high-quality, dividend-oriented stocks to help meet investors' needs for income and total return.

"For nearly 70 years, Franklin Templeton has been committed to providing best-in-class investment solutions to meet the evolving needs of our clients. The launch of LibertyShares, taking an active approach to ETFs, is a strong complement to our commitment to active management," adds Greg Johnson, chairman and CEO of Franklin Resources, Inc. "Our dedicated team of seasoned ETF specialists, in collaboration with our quantitative research experts and experienced active managers, positions us at the forefront of the advancement of ETF investing.

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