Franklin Templeton is preparing a new multi-asset income ETF, the Franklin Income Focus ETF (INCM), filed for a summer debut to U.S.-based investors and designed to maximize income. INCM is set to invest in a portfolio of both equity and debt securities that adapts dynamically to market conditions, including both common and dividend-paying stocks in addition to all varieties of fixed, floating, and variable rate debt instruments.
INCM will be managed by a team including Franklin Income Investors’ chief investment officer Ed Perks, who also manages the firm’s Franklin Income Fund mutual fund, incepted in 1948, as well as the firm’s Franklin Income SMA.
INCM does not yet list a fee, looking to find income throughout a full market cycle, with its debt targets also including senior floating rate and term loans, mortgage-backed securities, as well as secured and unsecured bonds. The multi-asset income ETF appears set to invest up to 30% of its assets in equity, index-linked notes according to its prospectus and 10% in equity-linked notes as well as up to 25% of assets in below-investment grade debt, according to its prospectus.
INCM may also us various derivatives and options for its equity securities as well as interest-ate and currency-related derivatives, looking for undervalued securities across debt and equities. INCM considers factors like anticipated cash flow, interest, dividend coverage or earnings prospects.
“Franklin is one of the under-the-radar ETF providers that is aggressively competing with larger firms on cost, with single country ETFs and dividend strategies,” said VettaFi’s head of ETF research, Todd Rosenbluth. “However, they continue to leverage experienced in-house expertise to support a wide range of actively-managed strategies. This pending fund will have broad flexibility to find income opportunities in a range of investment styles and showcases Franklin’s strengths.”
INCM is expected to join a roster of ETFs that include several focused on dividends including the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD ) and the Franklin International Low Volatility High Dividend Index ETF (LVHI ). For those investors looking for more income-focused strategies, it may be worth keeping an eye out for the ETF’s debut in the months ahead.
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