Presented by Syntax Advisers.
Deborah Fuhr: [00:00:07] Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investments. I’m Deborah for joining me today is Duane Green, president and CEO of Franklin Templeton Canada. Welcome, Duane.
Duane Green: [00:00:19] Thank you, Deborah. It’s great to be here.
Deborah Fuhr: [00:00:22] Last week, you listed three new ETFs in Canada. Can you tell us a bit about each of those new ETFs?
Duane Green: [00:00:27] These strategies that we launched in Canada last week are really leveraging the new capabilities we have, following the Legg Mason acquisition by Franklin Templeton last summer, to start bringing into the Canadian market new capabilities from the specialist investment managers that were a part of Legg Mason. So last week, we were thrilled to be able to launch the Franklin Brandywine Global Sustainable Income Optimizer Active ETF (FBGO) is the same strategy as the existing mutual funds that we’re now bringing that capability to the Canadian market. It’s an unconstrained, all-weather, global fixed income strategy.
The Franklin ClearBridge Sustainable Global Infrastructure Income Active ETF (FCII) is a high conviction, sustainability-focused strategy, where investment is primarily in listed infrastructure equity investments from around the world, seeking to deliver dependable and annual income, and it has a yield projected around 5%. So you’re getting an infrastructure investment as well as a yield. And the Franklin ClearBridge Sustainable International Growth ETF (FCSI) is another high conviction, actively managed, sustainability-focused strategy, investing primarily in high quality companies outside of Canada in the US, but representing the full spectrum of growth, structural, secular and emerging. And these three strategies all leverage decades long experience, they all leverage existing strategies that we have in other parts of the world, but we’re now able to bring those strategies to Canadian investors.
Deborah Fuhr: [00:01:52] Well, we do know in Canada that active ETFs are an important part of the industry, accounting for probably 21% of the assets. When you think about these products, what type of investors do you think will be using them and how do you think they will use them?
Duane Green: [00:02:06] Very candidly, Deborah, I hope all investors will want to use these strategies. The capabilities now and the proven expertize to cross sustainability, ESG; it’s ingrained in these investment management groups, and what we’re hearing from our clients is that they want active strategies, but with established performance history. So with that ESG component, but without having to sacrifice the performance. And so these new strategies will deliver just that, and obviously, we will have an aspect to seeing more investors on the institutional side that are going to want to use these, in addition to individual investors.
Deborah Fuhr: [00:02:44] So it sounds like investors in Canada are moving towards ESG and sustainable investing. Is that a true trend that you’re seeing?
Duane Green: [00:02:52] Absolutely, and it’s been earlier within the institutional space where we’ve adapted within the institutional space in Canada, certainly not to the point where ESG investing is in Europe, but it is coming and there is more and more demand from individuals, because they are focused on the environment, social and governance aspects of how money is invested. And so we feel this traunch of ETFs that we’re launching is going to be very well received by the Canadian market.
Deborah Fuhr: [00:03:21] Can you share any other plans that you might have for the rest of 2021 with us?
Duane Green: [00:03:26] Sir John (Templeton) launched the Templeton Growth Fund in Montreal back in 1954, so our organization has long roots in the Canadian market, but this is a new Franklin Templeton Canada. In fact, that’s what we’re calling it here, locally, around what we’re doing. And it’s really about being able to bring, with the addition of the new specialist investment managers following the acquisition, that depth and breadth of the capabilities that is so exciting for us. So what I would say for the rest of 2021, it’s going to be more – more capabilities as we see where there are gaps in the overall market, but also where we feel we can help provide investors and financial advisors and institutions those core building blocks to help them build portfolios.
Deborah Fuhr: [00:04:11] And how about your thoughts for the ETF industry in Canada for the rest of the year? We’ve seen it have a very strong first six months. What do you think the rest of the year holds?
Duane Green: [00:04:19] I really view ETFs as another vehicle for how we can deliver our investment capabilities to the end investor. There isn’t a conflict between mutual funds, ETFs or any other private pools or any other type of vehicle. It’s how do we deliver these great capabilities to the end investors, to give them the ability to transact with us and establish a relationship with us in the vehicle of their choice. ETFs in Canada were used initially for passive exposure, so the growth of smart beta, active strategies is just going to continue more and more, and it’s an exciting time.
Deborah Fuhr: [00:04:58] Yeah, I totally agree with you. In Canada is the home of the first ETF, which many people don’t realize. Thank you so much for joining us. That was a great update.
Duane Green: [00:05:06] Thanks for having me, Deborah. I really appreciate it.
Deborah Fuhr: [00:05:08] Last week in other news, there were 48 new listings. That’s actually a pretty active week compared to some of the prior weeks. There were 30 issuers that brought products to market. They were listed on 12 different exchanges, and the most active markets where the US with 21 new listings and mainland China with 14. There were also 20 new cross-listings.
[00:05:31] When we look at the types of products that came to market, one was exposure to gold. There was one crypto exposure, one was mixed exposure, six were fixed income and 39 were exposure to equity benchmarks. 20 of the products were active and clearly this year we’ve seen a lot of new active ETFs coming to market, especially in the US, where investors and the distributors are taking advantage of the semi- and non-transparent ability to bring products to market. 28 were tracking indices from 12 index providers, and the types of products coming to market were primarily focused on ESG thematics and also buffer ETFs.
[00:06:14] These have been trends that we’ve seen across the entire year and during the first six months of the year, we’ve seen 777 new ETFs come to market. There’s been 825 new cross-listings. There’s been 221 closures and 280 listings. If we were to compare this to last year, at this point there were 475 new products that came to market, so significantly more this year. The number of cross listings last year were 498, and the number of closures was higher last year at 272. So we are seeing that products are staying in the market and there’s more products coming to market.
[00:06:55] We’re in the process of cleaning the end of June data and we know already that the net inflows year-to-date for the first six months of the year are going to see us almost gathering as much of new assets as we did all of last year, so this year is definitely going to be a record in terms of both assets overall and net inflows.
[00:07:16] Thank you to our sponsor, Syntax Advisors and to Duane and of course, you for watching. If you’d like to see prior episodes, go to ETFTV.net. Thank you.
[00:07:34] ETF TV News does not provide investment advice nor recommend products.