Seemingly not happy enough with the gargantuan inflows to exchange traded funds over the last decade, Franklin Templeton is now trying to create a hybrid “king of ETFs”, according to Bloomberg. The asset manager is trying to start an exchange traded fund that will not only invest in equities, but will also invest in debt, commodities and currencies.
This will set it apart from most exchange traded funds, which limit themselves to only one asset class.
The fund is going to be called the Franklin Liberty Systematic Style Premia ETF and it is going to actively evaluate an asset’s characteristics, including value or momentum, when considering what it should purchase.
Half of the fund’s capital is going to be used to seek out attractive opportunities regardless of asset class and the other half will be used for a traditional long/short equity strategy that looks at a stock’s quality, value and momentum. There are some ETFs that have a similar approach, but it’s a style mostly used by hedge funds.
According to a filing, “the fund will be seeking to profit by utilizing quantitative models to identify investment opportunities across different asset classes and markets. By employing these two approaches, the investment manager seeks to provide positive absolute return over time while maintaining a relatively low correlation with traditional markets.”
from 2002 to 2018 (in billion U.S. dollars)
The fees for the fund were not disclosed and it will be run by Chandra Seethamraju, the head of smart beta and overlay strategies for the quantitative part of the money manager’s multi-asset solutions group.
We reported back in May about how ETFs could “amplify systemic risk” during the next market downturn. In that article we noted that less liquid asset classes are at risk for bearing the most pain in a volatile environment and the “systemic risk” theory about ETFs could wind up being tested during the next recession.
via ZeroHedge News https://ift.tt/2SZYvDb Tyler Durden