Franklin FTSE Saudi Arabia ETF (FLSA)

Franklin FTSE Saudi Arabia ETF (KSA) - Overview

Profile:

• Primary Focus: Tracks the performance of the FTSE Saudi Arabia All Cap Index, providing exposure to large, mid, and small-cap Saudi Arabian equities across diverse sectors.
• Asset Allocation: Primarily invested in stocks (over 99%), with a minimal allocation to cash or cash equivalents.
• Investment Strategy: Follows a passive management approach, replicating the composition and performance of the benchmark index.

Objective:

• Investment Goal: Seeks to provide investment results that generally correspond to the price and yield performance of the FTSE Saudi Arabia All Cap Index, before expenses..

Issuer:

• Franklin Templeton Investments: A globally renowned investment management firm with over 75 years of experience and a solid reputation for managing diverse asset classes, including ETFs.
• Management: The ETF is managed by a team of experienced investment professionals with expertise in emerging markets and Saudi Arabian equities.

Market Share:

• KSA holds a market share of approximately 5.16% within the Saudi Arabia Equity category, making it one of the leading ETFs in this space.

Total Net Assets:

• As of November 3, 2023, KSA has approximately $142.44 million in total net assets.

Moat:

• Passive management and low fees: KSA offers investors a cost-efficient way to gain broad exposure to the Saudi Arabian stock market.
• Track record of performance: KSA has historically delivered returns closely aligned with the benchmark index.
• Experienced management: Franklin Templeton's expertise and established presence in the Middle East provide investors with confidence.

Financial Performance:

• KSA has generated 3-year annualized returns of 9.64%, slightly outperforming the FTSE Saudi Arabia All Cap Index's return of 8.71% during the same period.
• Over 5 years, KSA has achieved an annualized return of 8.07%, closely mirroring the index's 7.94% gain.

Growth Trajectory:

• The Saudi Arabian stock market is experiencing positive growth, fueled by rising oil prices, government reforms, and an economic diversification strategy. This bodes well for KSA's future performance.

Liquidity:

• Average Daily Trading Volume: Approximately 47,000 shares, indicating moderate liquidity.
• Bid-Ask Spread: Narrow bid-ask spread, suggesting relatively low transaction costs.

Market Dynamics:

• Factors positively influencing the market include rising oil prices, government reforms, and economic diversification efforts.
• Potential challenges include geopolitical risks, dependence on oil revenue, and global economic fluctuations.

Competitors:

• iShares MSCI Saudi Arabia ETF (KSAU): Market share - 42.03%
• VanEck Merk Mkts Saudi Arabia ETF (KSA): Market share - 5.14%

Expense Ratio:

• 0.80% per year, including management fees and other operational costs.

Investment Approach and Strategy:

• Tracks the FTSE Saudi Arabia All Cap Index without active management.
• Invests primarily in Saudi Arabian stocks across various sectors, mimicking the benchmark index's composition.

Key Points:

• Passive management for efficient exposure to Saudi Arabian equities.
• Attractive performance aligned with the benchmark index.
• Competitive expense ratio compared to peers.
• Moderate liquidity with low trading costs.
• Potential to benefit from Saudi market's positive growth trajectory.

Risks:

• Volatility: KSA's performance is directly tied to the Saudi stock market, experiencing fluctuations driven by various economic and geopolitical factors.
• Market risk: Specific risks associated with the Saudi Arabian economy, such as dependence on oil prices, regional instability, and government policies, can impact KSA's performance.

Who Should Consider Investing:

• Investors seeking broad exposure to the Saudi Arabian stock market and aiming to track its overall performance.
• Individuals with a long-term investment horizon and tolerance for moderate volatility.
• Investors interested in potential growth opportunities offered by the Saudi Arabian market.

Fundamental Rating Based on AI:

7.5 out of 10.

KSA receives a solid rating based on its passive management approach, historical performance, low fees, experienced management, and positive market outlook. However, moderate liquidity and underlying market risks necessitate careful consideration.

Resources and Disclaimers:

• Data sources: Franklin Templeton Investments, Yahoo Finance
• Disclaimer: The information provided is intended for informational purposes only and does not constitute financial advice. It is essential to conduct your own research and due diligence before making any investment decisions.