Franklin Templeton Launches Low Tracking Error ESG-Screened Core ETFs for Sustainable Investing
Franklin Templeton has recently expanded its ESG-focused offerings with the launch of two new Article 8 UCITS ETFs, designed to cater to the growing demand among UK and European investors for sustainable investment options. The newly introduced funds are the Franklin S&P 500 Screened UCITS ETF and the Franklin S&P World Screened UCITS ETF.
Overview of the New UCITS ETFs
These latest ETFs are part of Franklin Templeton’s extensive suite of sustainable index-tracking funds, bringing the total number of its UCITS ETFs classified under Article 8 or 9 of the Sustainable Finance Disclosure Regulation (SFDR) to 17. The new funds will be listed on major European exchanges starting in April 2025, including:
- Deutsche Börse
- London Stock Exchange
- Euronext Paris
- Borsa Italiana
Geographic Distribution
The distribution of these ETFs will extend across several countries, such as:
- United Kingdom
- France
- Germany
- Netherlands
Investment Strategy and ESG Integration
The Franklin S&P 500 Screened UCITS ETF and the Franklin S&P World Screened UCITS ETF aim to provide investors with efficient access to US and global equities, utilizing the S&P 500 Guarded Index and the S&P Guarded World Index. These indices integrate ESG (Environmental, Social, and Governance) criteria while ensuring a minimal tracking error compared to their respective broader indices.
Key Features of the New ETFs
According to Caroline Baron, head of ETF distribution EMEA at Franklin Templeton, the new ETFs provide a cost-efficient and transparent method to access core equity exposures that also emphasize ESG profiles and a lower carbon footprint. Key features include:
- At least a 10% improvement in both carbon intensity and ESG scores compared to parent indices.
- Exclusion of companies involved in controversial sectors, such as tobacco, thermal coal, and weapons manufacturing.
- Screening out firms flagged for significant ESG-related controversies or violations of the UN Global Compact.
Supporting Strategic Asset Allocation
Lotfi Ladjemi, vice president of ETF distribution, emphasized that these ETFs are crafted to meet strategic asset allocation needs, offering sustainable access to screened benchmark indices without sacrificing index performance. The growing focus on ESG considerations among investors makes these ETFs a suitable choice for those who want to align their investments with sustainable practices.
Conclusion
With the launch of the Franklin S&P 500 Screened UCITS ETF and the Franklin S&P World Screened UCITS ETF, Franklin Templeton strengthens its commitment to providing investment solutions that prioritize sustainability. For more information on sustainable investing, visit UN PRI or explore our related articles on ESG Investing.
