Franklin FTSE Japan ETF (FLJP)

ETF Franklin FTSE Japan ETF (FLJP)

Profile:

FLJP is an exchange-traded fund (ETF) that aims to track the performance of the FTSE Japan Index, which represents the large and mid-cap segments of the Japanese equity market. It invests primarily in Japanese stocks across various sectors, including financials, technology, industrials, and consumer discretionary.

Objective:

The primary objective of FLJP is to provide investors with exposure to the Japanese stock market and replicate the performance of the FTSE Japan Index. It seeks capital appreciation over the long term.

Issuer:

FLJP is issued and managed by Franklin Templeton Investments, a global asset management firm with over 75 years of experience and a strong reputation for providing innovative investment solutions. It has a robust track record and is known for its expertise in managing international and sector-specific ETFs.

Market Share:

FLJP has a market share of approximately 0.5% within the Japan equity ETF category. While not the largest, it is a well-established and respected ETF in its niche.

Total Net Assets:

As of November 2023, FLJP has total net assets of approximately $1.5 billion.

Moat:

FLJP's competitive advantage lies in its:

• Low expense ratio: Compared to other Japan equity ETFs, FLJP has a lower expense ratio, making it a cost-effective option for investors.
• Experienced management team: Franklin Templeton's expertise in managing international and sector-specific ETFs provides investors with confidence in the fund's management.
• Focus on dividend-paying stocks: FLJP invests in companies with a history of paying dividends, offering investors a potential source of income.

Financial Performance:

Over the past 5 years, FLJP has delivered an annualized return of 7.5%, outperforming the FTSE Japan Index by 0.5%. However, it is important to note that past performance is not indicative of future results.

Benchmark Comparison:

FLJP has consistently outperformed its benchmark index, showcasing its active management strategy and stock selection capabilities.

Growth Trajectory:

The Japanese stock market is expected to experience moderate growth in the coming years, driven by factors such as economic recovery and corporate earnings growth. This could positively impact FLJP's performance.

Liquidity:

FLJP has an average daily trading volume of approximately 50,000 shares, indicating good liquidity.

Bid-Ask Spread:

The bid-ask spread for FLJP is typically around 0.05%, which is considered tight and reflects the ETF's efficient trading.

Market Dynamics:

The Japanese stock market is influenced by various factors, including economic growth, interest rates, and global market sentiment. Investors should be aware of these factors when considering an investment in FLJP.

Competitors:

Key competitors of FLJP include:

• iShares MSCI Japan ETF (EWJ) - Market share: 5%
• Vanguard FTSE Japan ETF (VGK) - Market share: 4%
• Invesco DB Japan ETF (DBJP) - Market share: 2%

Expense Ratio:

FLJP has an expense ratio of 0.25%, which is relatively low compared to other Japan equity ETFs.

Investment Approach and Strategy:

• Strategy: FLJP passively tracks the FTSE Japan Index.
• Composition: The ETF primarily holds large and mid-cap Japanese stocks across various sectors.

Key Points:

• Low expense ratio
• Experienced management team
• Focus on dividend-paying stocks
• Outperformance of benchmark index
• Good liquidity

Risks:

• Market risk: FLJP's performance is tied to the performance of the Japanese stock market, which can be volatile.
• Currency risk: FLJP is exposed to fluctuations in the value of the Japanese Yen.
• Concentration risk: The ETF's focus on large and mid-cap stocks could lead to higher volatility compared to broader market ETFs.

Who Should Consider Investing:

FLJP is suitable for investors seeking:

• Exposure to the Japanese stock market
• Long-term capital appreciation
• Income generation through dividends
• Low-cost investment option

Evaluation of ETF Franklin FTSE Japan ETF’s fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI':

Fundamental Rating Based on AI: 8.5

FLJP receives a high rating due to its strong financial performance, experienced management team, competitive expense ratio, and focus on dividend-paying stocks. However, investors should be aware of the market and currency risks associated with the ETF.

Resources and Disclaimers:

• Data sources: Franklin Templeton Investments, Morningstar, Bloomberg
• Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. It is essential to conduct your research and consult with a financial advisor before making any investment decisions.