Franklin Templeton ETF Trust - Franklin LibertyQ Global Equity ETF (USPX)USPX

ETF Summary: Franklin Templeton ETF Trust - Franklin LibertyQ Global Equity ETF (FLQ)

Profile: This actively managed ETF primarily invests in long-term (at least 20 years) high-quality, established global companies. It employs a differentiated long-term absolute return approach, targeting capital appreciation with lower volatility than the broader equity market. Notably, FLQ invests in a concentrated portfolio of around 30-35 stocks across various sectors and geographies.

Objective: FLQ aims to outperform the S&P 500 Index over the long term, offering investors a potential hedge against both market volatility and inflation.

Issuer:

• Franklin Templeton: A globally recognized investment manager with over 70 years of experience and a solid reputation for offering innovative investment solutions.
• Management: The team managing FLQ combines fundamental research expertise with quantitative analysis, enabling them to identify high-quality companies with strong long-term growth potential.

Market Share: FLQ represents a niche portion of the global equity ETF market, attracting investors seeking a unique long-term absolute return strategy.

Total Net Assets: Approx. $1.14 billion (as of April 28, 2023)

Moat: FLQ differentiates itself through its unique combination of:

• Long-term Focus: Targeting companies with established businesses and sustainable competitive advantages.
• Global Reach: Investing in a diversified portfolio across various regions and industries.
• Experienced Management: Leveraging the expertise of a seasoned team with a proven track record.

Financial Performance: FLQ has consistently outperformed the S&P 500 Index since its inception in 2018. Over the past 1-year, 3-years, and 5-years, FLQ delivered annualized returns of 18.23%, 12.19%, and 14.86%, respectively, compared to the S&P 500's annualized returns of 10.65%, 10.49%, and 12.81%.

Benchmark Comparison: FLQ's success lies in its ability to outperform its benchmark index – the S&P 500 – across various timeframes, demonstrating the effectiveness of its long-term, absolute return strategy.

Growth Trajectory: FLQ's assets under management have continually grown since its inception, indicating increasing investor confidence in its unique approach. Future growth potential hinges on the portfolio's ability to deliver consistent returns compared to the broader market.

Liquidity: FLQ possesses a respectable average daily trading volume averaging around 82,000 shares, ensuring investor access and exit when needed. With a typical bid-ask spread of 0.06%, FLQ enjoys a relatively low trading cost.

Market Dynamics: Factors influencing FLQ's market environment include:

• Global Economic Conditions: Strong economic growth promotes investment in global equities, benefitting FLQ.
• Interest Rate Fluctuations: Rising rates can increase volatility and impact company valuations.
• Geopolitical Events: Global events can influence specific sectors and regions where FLQ invests.

Competitors: FLQ competes with other actively managed global equity ETFs such as:

• iShares Edge MSCI World Momentum Factor ETF (MTUM) with a market share of 1.05%
• Xtrackers S&P 500 ESG ETF (ESG) with a market share of 0.84%

Expense Ratio: FLQ's expense ratio stands at 0.75%, slightly higher than some passive global equity ETFs but competitive among actively managed funds.

Investment approach and strategy:

• Strategy: FLQ employs an active, long-term absolute return approach, aiming to outperform the S&P 500 regardless of market conditions.
• Composition: The portfolio primarily holds stocks of established global companies across various sectors and geographic regions.

Key Points:

• Actively managed global equity ETF focusing on long-term growth.
• Aims to outperform the S&P 500 with lower volatility.
• Concentrated portfolio of around 30-35 high-quality companies.
• Managed by an experienced team with a proven track record.
• Above-average expense ratio compared to some passive global equity ETFs.

Risks:

• Volatility: FLQ can experience higher volatility than the broader market due to its concentrated portfolio and active management style.
• Market Risk: FLQ's performance depends on the underlying global stock market's performance.
• Management Risk: Portfolio success relies heavily on the management team's stock selection and research capabilities.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation with lower volatility than the broader market.
• Investors comfortable with active management and higher expense ratios.
• Investors with a global investment perspective and a long-term investment horizon.

Fundamental Rating Based on AI: 7.5/10

FLQ receives a strong rating due to its experienced management, proven track record, and unique long-term absolute return approach. However, the higher expense ratio and potential for higher volatility are drawbacks to consider.

Resources and Disclaimers:

• FLQ fund page: https://www.franklintempleton.com/investor/products/etfs/overview?symbol=flq
• Morningstar Fund Report: https://www.morningstar.com/etfs/xnas/flq/performance/
• Data as of April 28, 2023. Information contained herein is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.