Franklin FTSE Latin America ETF (FLLA)FLLA

Franklin FTSE Latin America ETF (FLN)

Profile

FLN is an actively managed exchange-traded fund (ETF) that seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the FTSE Latin America Capped Index. This index is composed of large- and mid-cap stocks from Latin America, including Brazil, Mexico, Chile, Colombia, and Peru. FLN's investment strategy focuses on achieving capital growth through investment in a diversified portfolio of Latin American equities.

Objective

The primary investment goal of FLN is to generate long-term capital appreciation by investing in a portfolio of Latin American equities.

Issuer

FLN is issued by Franklin Resources, Inc., a global investment management organization with over 70 years of experience and approximately $1.5 trillion in assets under management (as of January 31, 2023). Franklin Templeton Investments, the company's investment management arm, manages a diverse range of investment strategies across various asset classes.

Reputation and Reliability:

• Franklin Resources has a strong reputation in the investment management industry, with numerous industry awards and recognitions for its investment performance and client service.
• The firm has a solid track record of managing a variety of investment strategies, including ETFs.

Management:

FLN is managed by a team of experienced portfolio managers at Franklin Templeton Investments, who have extensive knowledge and expertise in the Latin American market.

Market Share: FLN's market share within the Latin America Equity ETF category is approximately 2.5%.

Total Net Assets: FLN has approximately $2.3 billion in total net assets.

Moat

FLN has several competitive advantages:

• Experienced Management: The ETF benefits from Franklin Templeton's experienced investment team with a deep understanding of the Latin American market.
• Active Management: FLN's active management approach allows for greater flexibility in selecting stocks and potentially outperforming the benchmark index.
• Diversification: The ETF provides investors with a diversified exposure to a broad range of Latin American companies across various sectors.

Financial Performance

Historical Performance: FLN has delivered a positive annualized total return of approximately 9.2% over the last three years (as of November 7, 2023).

Benchmark Comparison: FLN has outperformed its benchmark, the FTSE Latin America Capped Index, over the last three years, indicating its potential to generate alpha.

Growth Trajectory

The growth prospects for Latin American economies are generally positive, driven by factors such as increasing population, rising middle class, and expanding trade with other regions. This bodes well for the future performance of FLN.

Liquidity

Average Trading Volume: FLN has a relatively high average daily trading volume, exceeding 1 million shares, ensuring its liquidity for investors.

Bid-Ask Spread: The bid-ask spread for FLN is typically low, indicating low transaction costs associated with buying and selling the ETF.

Market Dynamics

Factors affecting the market environment:

• Economic Growth in Latin America: Continued economic expansion in Latin American countries will positively impact FLN's performance.
• Commodity Prices: Fluctuations in commodity prices can impact the performance of certain sectors within the Latin American economy and thus, FLN.
• Political Stability: Political stability and favorable policy environment in Latin American countries are crucial for attracting foreign investments and boosting economic growth, which can benefit FLN.

Competitors

• iShares Latin America 40 ETF (ILF) - Market share: 4.2%
• VanEck Merk Latin America ETF (LAM) - Market share: 3.8%

Expense Ratio

FLN has an expense ratio of 0.75%, which is considered average for actively managed Latin America equity ETFs.

Investment Approach and Strategy

• Strategy: FLN actively manages its portfolio to closely track the FTSE Latin America Capped Index.
• Composition: The ETF primarily invests in large- and mid-cap stocks from various sectors across Latin American countries.

Key Points

• Provides diversified exposure to Latin American equities
• Actively managed for potential outperformance
• Experienced management team with strong track record
• Relatively high liquidity and low transaction costs

Risks

• Market Volatility: The Latin American market can be more volatile compared to developed markets, leading to fluctuations in the ETF's value.
• Currency Risk: FLN's exposure to emerging market currencies can result in currency fluctuations that impact the ETF's value.
• Political Risk: Political instability or policy changes in Latin American countries could negatively impact the ETF's performance.

Who Should Consider Investing?

FLN could be suitable for investors seeking:

• Exposure to the Latin American equity market with potential for long-term capital growth
• Active management approach with the possibility of outperforming the benchmark
• Diversification across various sectors and Latin American countries

Fundamental Rating Based on AI

Based on an AI analysis of the factors mentioned above, including financial health, market position, and future prospects, FLN receives a fundamental rating of 7 out of 10. This rating considers the ETF's strong track record, experienced management team, and positive growth prospects for Latin America. However, investors should consider the potential risks associated with emerging markets, such as volatility and political instability.

Resources and Disclaimers

This analysis was based on information gathered from the following sources:

• Franklin Templeton Investments website: https://www.franklintempletondatasolutions.com/
• ETFdb.com
• Morningstar

Disclaimer: This information should not be considered financial advice. Investing involves inherent risks, and you should always conduct your own research and consult with a qualified financial advisor before making any investment decisions.