Franklin Templeton Converts Two Mutual Funds to ETFs

Rhea-AI Summary

Franklin Templeton has announced the conversion of two mutual funds into exchange-traded funds (ETFs): the BrandywineGLOBAL–Dynamic US Large Cap Value ETF (DVAL) and the Martin Currie Sustainable International Equity ETF (MCSE). This strategic shift aims to meet rising client demand for actively managed ETFs, retaining the funds' existing investment objectives and strategies. The firm now operates a total of 58 ETFs with approximately $9 billion in assets under management.

Positive

• Conversion of two mutual funds to ETFs enhances product offerings and aligns with client demand.
• Both ETFs maintain existing investment objectives and strategies, ensuring continuity for investors.
• The firm now offers 58 ETFs with approximately $9 billion in assets under management, indicating significant market presence.

Negative

• None.

New Brandywine Global and Martin Currie ETFs expand the firm’s offerings across asset classes and geographies

SAN MATEO, Calif.--(BUSINESS WIRE)-- Franklin Templeton today announced the effective conversion of two mutual funds to exchanged-traded funds (ETFs), expanding the firm’s ETF lineup for actively managed US large cap value and international growth strategies. The two converted funds are the BrandywineGLOBAL–Dynamic US Large Cap Value ETF (NASDAQ: DVAL) and the Martin Currie Sustainable International Equity ETF (NASDAQ: MCSE). Brandywine Global Investment Management, LLC and Martin Currie Inc. are specialist investment managers of Franklin Templeton.

“These two funds represent our first mutual-fund-to-ETF conversions,” said Patrick O’Connor, Head of Global ETFs for Franklin Templeton. “Leveraging the deep expertise and focus of our independent specialist investment managers, these two funds have historically delivered exceptional results and diversification potential for clients. Now we are excited to continue to offer these investment strategies within the attractive and popular ETF vehicle.”

The conversions were first announced in December 2021, and the firm received shareholder approval in June 2022. The two ETFs will be managed in a substantially similar manner as the previous mutual funds. Each ETF will retain its existing investment objective, principal investment strategy, primary subadviser and portfolio management team.

DVAL, BrandywineGLOBAL–Dynamic US Large Cap Value ETF, seeks long-term capital appreciation by investing in US equities using a quantitative approach. The fund normally invests at least 80% of its net assets in the equity securities of US large capitalization companies.

MCSE, Martin Currie Sustainable International Equity ETF, strives to provide long-term capital appreciation by investing in equity and equity-related securities of foreign companies. The fund focuses on finding companies that have a strong history of offering high and sustainable returns on invested capital over time.

Franklin Templeton’s US ETF platform provides solutions for a range of market conditions and investment objectives through active, smart beta and passively managed ETFs. The addition of these two ETFs is intended to further diversify Franklin Templeton’s product suite across asset classes and geographies.

“In converting these mutual funds to ETFs, we are responding to growing client demand for these products while also broadening our lineup to include additional strategic offerings in the actively managed US large cap value and international growth spaces,” O’Connor noted. “We now offer 58 ETFs in the US with a combined AUM of approximately $9 billion.”

About Franklin Templeton

Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 155 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers boutique specialization on a global scale, bringing extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 30 countries and approximately 1,300 investment professionals, the California-based company has 75 years of investment experience and approximately $1.3 trillion in assets under management as of September 30, 2022. For more information, please visit franklintempleton.com and follow us on LinkedIn, Twitter and Facebook.

Copyright © 2022. Franklin Templeton. All rights reserved.

Before investing, carefully consider a fund’s investment objectives, risks, charges and expenses. You can find this and other information in each prospectus, or summary prospectus, if available, at www.franklintempleton.com. Please read it carefully.

Prior to close of business on October 28, 2022, the Funds referenced operated as open-end mutual funds. The Funds have an identical investment goal and substantially similar investment strategies as the predecessor mutual funds.

All investments involve risks, including possible loss of principal.

BrandywineGLOBAL–Dynamic US Large Cap Value ETF Risks:

Equity securities are subject to price fluctuation and possible loss of principal. The value approach to investing involves the risk that stocks may remain undervalued. Value stocks may underperform the overall equity market while the market concentrates on growth stocks. The manager’s investment style may become out of favor and/or the manager’s selection process may prove incorrect, which may have a negative impact on the Fund’s performance.

Martin Currie Sustainable International Equity ETF Risks:

Equity securities are subject to price fluctuation and possible loss of principal. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. The fund may be significantly overweight to underweight certain companies, industries or market sectors, which may cause the fund's performance to be more sensitive to developments affecting those companies, industries or sectors. International investments are subject to special risks including currency fluctuations, as well as social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. To the extent the fund focuses its investments in a single country or only a few countries in a particular geographic region, economic, political, regulatory or other conditions affecting such country or region may have a greater impact on fund performance relative to a more geographically diversified fund. The managers’ environmental social and governance (ESG) strategies may limit the types and number of investments available and, as a result, may forego favorable market opportunities or underperform strategies that are not subject to such criteria. ESG factors or criteria are subjective and qualitative, and the analysis by the manager may not always accurately assess ESG practices of a security or issuer, or reflect the opinions of other investors or advisors. There is no guarantee that the strategy's ESG directives will be successful or will result in better performance and may not work as intended. Derivatives, such as options and futures, can be illiquid, may disproportionately increase losses and have a potentially large impact on fund performance. In addition to the fund's operating expenses, the fund will indirectly bear the operating expenses of any underlying funds. The fund is classified as "non-diversified," which means it may invest a larger percentage of its assets in a smaller number of issuers than a diversified fund. To the extent the fund invests its assets in a smaller number of issuers, the fund will be more susceptible to negative events affecting those issuers than a diversified fund.

ETFs trade like stocks, fluctuate in market value and may trade at prices above or below their net asset value. Brokerage commissions and ETF expenses will reduce returns. ETF shares may be bought or sold throughout the day at their market price (MP), not their Net Asset Value (NAV), on the exchange on which they are listed. Shares of ETFs are tradable on secondary markets and may trade either at a premium or a discount to their NAV on the secondary market. Prior to trading in the secondary market, shares of the fund are "created" at NAV by market makers, large investors and institutions only in block-size Creation Units. Each "creator" or "Authorized Participant" enters into an authorized participant agreement with Franklin Templeton Distributors, Inc, an affiliate of the fund's sponsor, Franklin Holdings, LLC. Only an Authorized Participant may create or redeem Creation Units directly with the fund. Retail investors buy and sell shares of ETFs at market price (not NAV) in the secondary market throughout the trading day. These shares are not individually available for purchase or redemption directly from the ETF.

Franklin Distributors, LLC serves as the distributor of Creation Units for the ETFs on an agency basis. Franklin Distributors, LLC does not maintain a secondary market in the funds' shares.

Franklin Distributors, LLC. Member FINRA, SIPC. and Brandywine Global Investment Management and Martin Currie Inc. are Franklin Templeton affiliates companies.

NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE.

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Franklin Templeton Corporate Communications:

Lisa Tibbitts, (917) 674-8060, lisa.tibbitts@franklintempleton.com

Pholida Barclay, (212) 632-3204, pholida.barclay@franklintempleton.com

Source: Franklin Templeton

FAQ

What conversion has Franklin Templeton recently completed for DVAL and MCSE?

Franklin Templeton converted its BrandywineGLOBAL–Dynamic US Large Cap Value mutual fund into the DVAL ETF and the Martin Currie Sustainable International Equity mutual fund into the MCSE ETF.

What is the significance of the DVAL and MCSE ETFs for investors?

The conversion allows investors to access these strategies in a more popular and flexible ETF format, while retaining the original investment objectives and strategies.

How many ETFs does Franklin Templeton currently offer?

Franklin Templeton now offers a total of 58 ETFs, with combined assets under management of approximately $9 billion.

When were the mutual fund conversions for DVAL and MCSE approved?

Shareholder approval for the conversions was received in June 2022.