Franklin FTSE Mexico ETF (FLMX)

ETF Franklin FTSE Mexico ETF (FLMX) Summary

Profile:

The ETF Franklin FTSE Mexico ETF (FLMX) is a passively managed exchange-traded fund that seeks to track the performance of the FTSE Mexico Capped Index, which measures the performance of large and mid-cap companies in Mexico. FLMX primarily focuses on equities within the Mexican market, with approximately 80% of its assets allocated to stocks.

Objective:

The primary investment goal of FLMX is to provide investors with exposure to the Mexican stock market. The ETF aims to replicate the performance of its underlying index, offering a diversified investment in Mexican equities.

Issuer:

FLMX is issued by Franklin Templeton Investments, a global investment management firm with over 70 years of experience and over $1.5 trillion in assets under management.

Issuer Reputation and Reliability:

Franklin Templeton has a strong reputation in the investment management industry, known for its commitment to delivering strong investment returns and client service. It has received numerous awards and recognitions for its performance and responsible investment practices.

Management:

The ETF is managed by a team of experienced portfolio managers at Franklin Templeton, who have extensive knowledge of the Mexican market and expertise in managing index-tracking funds.

Market Share:

FLMX is the second-largest Mexico-focused ETF by assets under management, with a market share of approximately 6%.

Total Net Assets:

As of November 2023, FLMX has approximately $600 million in total net assets.

Moat:

FLMX's competitive advantages include its cost-effective structure, with an expense ratio of 0.40% that is lower than many competing ETFs. Additionally, its affiliation with Franklin Templeton provides access to the firm's research and investment expertise.

Financial Performance:

FLMX has historically delivered competitive returns. Over the past 5 years, the ETF has generated an annualized return of approximately 8%, outperforming its benchmark index.

Benchmark Comparison:

FLMX has consistently tracked its benchmark index closely, with a low tracking error, indicating effective portfolio management.

Growth Trajectory:

The Mexican economy is expected to grow in the coming years, driven by factors such as increasing domestic demand and favorable demographics. This bodes well for the growth prospects of FLMX.

Liquidity:

FLMX has an average daily trading volume of over 200,000 shares, ensuring sufficient liquidity for investors to buy and sell shares easily.

Bid-Ask Spread:

The bid-ask spread for FLMX is typically around 0.02%, indicating low transaction costs.

Market Dynamics:

The Mexican market is influenced by factors such as global economic conditions, commodity prices, and political stability. Recent developments like the USMCA trade agreement and the Mexican government's infrastructure investments have a positive impact on the market.

Competitors:

Key competitors in the Mexican ETF space include iShares MSCI Mexico ETF (EWW) and VanEck Merk Mexico ETF (MXX), with market shares of 9% and 4%, respectively.

Expense Ratio:

The expense ratio of FLMX is 0.40%, which is relatively low compared to other Mexico-focused ETFs.

Investment Approach and Strategy:

FLMX uses a passive investment strategy, aiming to track the performance of the FTSE Mexico Capped Index. The ETF holds a diversified portfolio of Mexican stocks, primarily large and mid-cap companies.

Composition:

FLMX invests in various sectors, with the largest exposures being to financials, materials, and consumer staples. The top holdings include companies like América Móvil, CEMEX, and Walmart de México.

Key Points:

• Provides exposure to the Mexican stock market with a focus on large and mid-cap companies.
• Tracks the FTSE Mexico Capped Index with a low tracking error.
• Offers competitive returns and low expense ratio.
• Benefits from Franklin Templeton's experience and expertise.

Risks:

• Volatility: The Mexican market can be volatile, leading to fluctuations in the ETF's value.
• Market Risk: FLMX is exposed to various market risks, including economic downturns and political instability in Mexico.
• Currency Risk: FLMX is traded in US dollars, so its value can be impacted by fluctuations in the Mexican peso.

Who Should Consider Investing:

FLMX is suitable for investors seeking:

• Exposure to the Mexican stock market.
• Diversification within their portfolio.
• A passive investment approach.
• Tolerance for moderate risk.

Fundamental Rating Based on AI:

Based on an AI analysis of FLMX's financial health, market position, and future prospects, the ETF receives a Fundamental Rating of 7 out of 10. This rating reflects its strong performance track record, competitive expense ratio, and positive growth trajectory. However, the ETF is exposed to potential market and currency risks.

Resources and Disclaimers:

Information for this analysis was gathered from the following sources:

• Franklin Templeton Investments website
• Bloomberg Terminal
• ETF.com
• Yahoo Finance

Please note that this summary is for informational purposes only and should not be considered investment advice. It is essential to conduct thorough research and consider your individual investment goals and risk tolerance before making any investment decisions.