Franklin Liberty Intermediate Municipal Opportunities ETF (FLMI)

Overview of Franklin Liberty Intermediate Municipal Opportunities ETF (FLMI)

Profile:

FLMI is an actively managed exchange-traded fund focused on intermediate-term municipal bonds. It primarily invests in investment-grade municipal debt securities with maturities of 3 to 10 years. The fund aims to provide high current income exempt from federal income taxes and, to a lesser extent, state and local taxes.

Objective:

The primary objective of FLMI is to generate high current income and capital appreciation through active management of its portfolio of municipal bonds.

Issuer:

Franklin Templeton Investments is the issuer of FLMI.

• Reputation and Reliability: Franklin Templeton is a well-established and reputable asset management firm with over 75 years of experience. The firm manages over $1.5 trillion in assets across various investment strategies.
• Management: The portfolio management team responsible for FLMI has extensive experience in managing municipal bond portfolios. The team leverages its expertise to actively manage the portfolio and select undervalued bonds with strong creditworthiness.

Market Share:

FLMI has a market share of approximately 0.5% within the intermediate-term municipal bond ETF category.

Total Net Assets:

As of November 10, 2023, FLMI has total net assets of approximately $1.2 billion.

Moat:

FLMI's competitive advantages include:

• Active Management: The fund's active management approach allows the portfolio managers to select individual bonds with strong credit characteristics and potential for above-average returns.
• Experienced Management Team: The portfolio management team has a proven track record of success in managing municipal bond portfolios.
• Focus on Intermediate-Term Bonds: The fund's focus on intermediate-term bonds provides a balance between potential for capital appreciation and interest income.

Financial Performance:

FLMI has delivered a historical annualized total return of 4.5% since its inception in 2013. The fund has outperformed its benchmark index, the Bloomberg Barclays Municipal Intermediate Index, over various timeframes.

Growth Trajectory:

The municipal bond market is expected to experience moderate growth in the coming years. The increasing demand for tax-exempt income, particularly from high-net-worth individuals and institutional investors, is likely to drive this growth.

Liquidity:

• Average Trading Volume: FLMI has an average daily trading volume of approximately 200,000 shares.
• Bid-Ask Spread: The fund's typical bid-ask spread is around 0.05%, indicating good liquidity and low trading costs.

Market Dynamics:

Factors affecting FLMI's market environment include:

• Interest Rate Environment: Rising interest rates can negatively impact the value of fixed-income investments like municipal bonds.
• Economic Growth: Strong economic growth can lead to increased tax revenues, which can benefit the municipal bond market.
• Credit Risk: The creditworthiness of the underlying bonds in FLMI's portfolio can impact the fund's performance.

Competitors:

Key competitors of FLMI include:

• iShares National AMT-Free Muni Bond ETF (MUB) - Market Share: 2.5%
• Vanguard Tax-Exempt Bond Index Fund ETF (VTEB) - Market Share: 2.0%
• SPDR Nuveen S&P High Yield Municipal Bond ETF (HYMB) - Market Share: 1.5%

Expense Ratio:

FLMI has an expense ratio of 0.45%.

Investment Approach and Strategy:

• Strategy: FLMI actively manages its portfolio to identify and purchase undervalued municipal bonds with strong creditworthiness.
• Composition: The fund primarily invests in investment-grade municipal bonds with maturities of 3 to 10 years.

Key Points:

• Actively managed municipal bond ETF
• Focuses on intermediate-term bonds
• Seeks high current income and capital appreciation
• Experienced management team
• Relatively low expense ratio

Risks:

• Interest Rate Risk: Rising interest rates can decrease the value of FLMI's holdings.
• Credit Risk: The creditworthiness of the underlying bonds can impact the fund's performance.
• Market Risk: General market volatility can affect FLMI's price.

Who Should Consider Investing:

FLMI is suitable for investors seeking:

• Tax-exempt income
• Moderate potential for capital appreciation
• Investment in intermediate-term municipal bonds

Fundamental Rating Based on AI:

Based on an AI-powered analysis of various factors, including financial health, market position, and future prospects, FLMI receives a 7 out of 10 rating.

Justification:

• Strong financial performance and track record of outperforming its benchmark
• Experienced management team with a proven track record
• Competitive expense ratio
• Moderate market share but established presence in the intermediate-term municipal bond ETF category

Resources and Disclaimers:

• Data sources: Franklin Templeton Investments, Bloomberg, and ETF.com
• Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult a financial advisor before making any investment decisions.