Franklin Templeton has announced the launch of two sustainable, thematic ETFs, the Franklin Future of Food UCITS ETF and Franklin Future of Health and Wellness UCITS ETF.
These new offerings bring the total number of thematic ETFs to three and Article 8 SFDR compliant ETFs to 10 in the Franklin Templeton ETF range.
The firm writes that global population growth and the subsequent need to increase food production is a key challenge for humanity in the future, driving innovation and investment in new and more efficient technologies. As populations live longer, demand for more frequent medical care and wellness activities is also on the rise, creating significant potential to engage in healthcare innovation.
Dina Ting, Head of Global Index Portfolio Management, Franklin Templeton, says: “These new Article 8 ETFs take a multi-dimensional investment approach to stock selection in that they leverage long-term societal shifts resulting from macroeconomic, geopolitical and technological developments. By 2050, the global population will have increased by two billion to almost 10 billion, meaning that food production will need to increase by around 60 per cent. The wellness market is also projected to grow from USD4.4 trillion in 2020, or 5 per cent of global economic output, to USD6.8 trillion by 2030.”
The Franklin Future of Food UCITS ETF and Franklin Future of Health and Wellness UCITS ETF5 track the performance Sustainable Food Index of the Solactive and Solactive Sustainable Health and Wellness Index6 respectively.
The Solactive Sustainable Food Index is designed to provide exposure to companies related to the food industry that utilise technology, efficient production and supply practices, and/or demonstrate innovation with the aim of creating a sustainable food ecosystem. Companies included represent industries such as agriculture machinery, smart farming, aquaculture and sustainable and healthy food, amongst others, and must be deemed by Institutional Shareholder Services (ISS), the world’s leading provider of corporate governance and responsible investment solutions, to be contributing to SDG 2 (Zero Hunger), SDG 9 (Industry, Innovation & Infrastructure), SDG 12 (Responsible Consumption & Production), SDG 13 (Climate Action), SDG 14 (Life Below Water) or SDG 15 (Life On Land).
Meanwhile, the Solactive Sustainable Health and Wellness Index is designed to provide exposure to those companies utilising technology and demonstrating innovation within the healthcare industry as well as companies that are enabling access to care, healthcare or wellness provision for a wide range of consumers including the elderly. This includes companies from areas such as genomics, medical imaging, e-healthcare, mind and body wellness, senior diseases and independent aging recognized by ISS to be contributing to SDG 3 (Good Health and Well-being).
Any stock deemed to be significantly obstructing any of the 17 SDGs will not be eligible to join the indices. Companies are additionally screened for specific ESG criteria, including, amongst others, board gender diversity and impact on biodiversity-sensitive areas.
Rafaelle Lennox, Head of UCITS ETF Product Strategy, Franklin Templeton, says: “We are delighted to have partnered with Solactive and ISS in the creation of these forward-looking solutions aligned to UN SDGs, providing investors with exposure to companies globally involved in innovative and sustainable practices across food and healthcare.”
The new ETFs will list on the Deutsche Börse Xetra (XETRA) on 6th July, the London Stock Exchange (LSE) on 7th July and the Borsa Italiana on 18th July. They are registered in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Spain, Sweden and the UK. The ETFs will be managed by Dina Ting, Head of Global Index Portfolio Management, and Lorenzo Crosato, ETF Portfolio Manager at Franklin Templeton.
Caroline Baron, Head of ETF Distribution, EMEA, Franklin Templeton, says: “These two new sustainable ETFs offer access to secular growth stories and by investing in innovative companies and potential disruptors have the potential to outperform traditional indices. Franklin Templeton is a leader in thematic and technology investing and allocating to these ETFs is an attractive means of portfolio diversification for investors, given their unique exposure.”
With a total expense ratio (TER7) of 0.30 per cent, Franklin Templeton writes that the new ETFs will provide European investors with competitive fees amongst the lowest levels for sustainable solutions within their respective categories in Europe.