Franklin FTSE Japan Hedged ETF (FLJH)

Franklin FTSE Japan Hedged ETF (FLJP) Overview

Profile:

• Target Sector: Japanese equities
• Investment Strategy: Tracks the performance of the FTSE Japan Index, hedging against currency fluctuations between the Japanese yen and the U.S. dollar.
• Asset Allocation: Primarily invests in large and mid-cap Japanese companies across various sectors.

Objective:

• Provide investors with exposure to the Japanese equity market while mitigating currency risk.

Issuer:

• Franklin Templeton Investments: A leading global asset management firm with a long history and strong reputation.
• Management: Experienced team with expertise in managing Japanese equities and hedging strategies.

Market Share:

• FLJP is a relatively small ETF with a market share of less than 1% in the Japan Equity ETF category.

Total Net Assets:

• Approximately $67 million as of October 26, 2023.

Moat:

• Currency hedging strategy provides a unique advantage for investors seeking to avoid currency risk.
• Leverage on Franklin Templeton's established presence and expertise in the Japanese market.

Financial Performance:

• Year-to-date return: -8.5% (as of October 26, 2023)
• Trailing 1-year return: -14.5%
• Trailing 3-year return: -1.5%
• Underperforms the FTSE Japan Index (unhedged) over the past year but outperforms the benchmark over a longer timeframe.

Growth Trajectory:

• The Japanese market is expected to experience moderate growth in the coming years.
• FLJP's growth potential is tied to the performance of the Japanese economy and the yen exchange rate.

Liquidity:

• Average Trading Volume: Approximately 12,000 shares per day
• Bid-Ask Spread: Tight spread, indicating good liquidity.

Market Dynamics:

• Economic growth in Japan
• Global economic conditions
• Interest rate policies
• Fluctuations in the yen exchange rate

Competitors:

• iShares MSCI Japan ETF (EWJ): Market share of 25%
• Vanguard FTSE Japan ETF (VGK): Market share of 15%
• Invesco Dynamic Japan ETF (JPGE): Market share of 5%

Expense Ratio:

• 0.40% per year

Investment Approach and Strategy:

• Tracks the FTSE Japan Index, which includes large and mid-cap Japanese companies.
• Uses currency hedging to mitigate USD/JPY fluctuations.

Key Points:

• Provides exposure to Japanese equities with currency risk mitigation.
• Access to a diversified portfolio of Japanese companies.
• Management expertise from Franklin Templeton.

Risks:

• Volatility of the Japanese stock market.
• Currency risk (although mitigated by hedging).
• Potential tracking error compared to the benchmark index.

Who Should Consider Investing:

• Investors seeking exposure to the Japanese market with minimized currency risk.
• Investors with a long-term investment horizon.
• Investors comfortable with moderate volatility.

Evaluation of ETF Franklin FTSE Japan Hedged ETF's fundamentals using an AI-based rating system on a scale of 1 to 10:

Fundamental Rating Based on AI: 7.5

Analysis: FLJP demonstrates strong fundamentals with a reputable issuer, a unique currency hedging strategy, and competitive expense ratio. However, its smaller market share and performance lagging behind the unhedged index in the short term slightly diminishes its overall score.

Resources and Disclaimers:

• Data sources: Franklin Templeton Investments website, ETF.com
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please conduct your own research before making any investment decisions.