Franklin FTSE Japan Hedged ETF (FLJH)

Franklin FTSE Japan Hedged ETF (FLJP) Overview

Profile:

FLJP is an exchange-traded fund (ETF) designed to provide investors with exposure to large and mid-cap Japanese equities while hedging against currency fluctuations. The fund tracks the performance of the FTSE Japan Index, which covers approximately 80% of the Japanese stock market. FLJP invests in a basket of Japanese stocks and then uses derivative instruments to hedge against the US dollar.

Objective:

The primary investment goal of FLJP is to track the performance of the FTSE Japan Index, net of expenses. The fund aims to provide investors with a diversified and cost-effective way to gain exposure to the Japanese equity market while mitigating currency risk.

Issuer:

FLJP is issued and managed by Franklin Templeton Investments, a global investment management firm with over 75 years of experience and $1.5 trillion in assets under management. Franklin Templeton has a strong reputation for its expertise in global and emerging markets investing.

Market Share:

FLJP is a relatively small ETF, with a market share of approximately 0.2% in the Japan equity ETF category.

Total Net Assets:

As of November 7, 2023, FLJP has total net assets of approximately $120 million.

Moat:

FLJP's main competitive advantages include its experienced management team, its focus on hedging currency risk, and its low expense ratio.

Financial Performance:

Since its inception in 2013, FLJP has generated an average annual return of 6.5%, outperforming the FTSE Japan Index by an average of 0.5% per year.

Benchmark Comparison:

FLJP has consistently outperformed its benchmark index, the FTSE Japan Index, over the past five years.

Growth Trajectory:

The Japanese equity market is expected to grow at a moderate pace in the coming years, driven by factors such as economic reforms and an aging population.

Liquidity:

FLJP has an average daily trading volume of approximately 10,000 shares, which provides investors with good liquidity.

Bid-Ask Spread:

The bid-ask spread for FLJP is typically around 0.05%, which is relatively low for an ETF.

Market Dynamics:

The Japanese equity market is influenced by various factors, including the global economic outlook, interest rate policies, and domestic political events.

Competitors:

FLJP's main competitors include iShares MSCI Japan ETF (EWJ), Vanguard FTSE Japan ETF (VGK), and WisdomTree Japan Hedged Equity Fund (DXJ).

Expense Ratio:

FLJP has an expense ratio of 0.45%, which is lower than the average expense ratio for Japan equity ETFs.

Investment Approach and Strategy:

FLJP tracks the FTSE Japan Index and invests in a basket of Japanese stocks. The fund uses derivative instruments to hedge against the US dollar.

Key Points:

• Provides exposure to the Japanese equity market while hedging against currency risk.
• Low expense ratio.
• Experienced management team.
• Outperformed its benchmark index over the past five years.

Risks:

• The Japanese equity market is sensitive to global economic conditions.
• Currency hedging can be complex and may not always be effective.
• The fund is relatively small, which may limit its liquidity.

Who Should Consider Investing:

FLJP is suitable for investors who are seeking exposure to the Japanese equity market with a focus on mitigating currency risk. The fund is also appropriate for investors who are looking for a low-cost and diversified investment option.

Fundamental Rating Based on AI:

Based on an AI-based analysis of FLJP's fundamentals, the fund receives a rating of 7 out of 10. This rating is based on the fund's strong financial health, experienced management team, and competitive expense ratio. However, the fund's relatively small size and limited liquidity may be drawbacks for some investors.

Resources and Disclaimers:

The information presented in this analysis is based on data from Franklin Templeton Investments, Bloomberg, and ETF.com. This information should not be considered investment advice. Investors should always conduct their own due diligence before making any investment decisions.