Franklin Templeton has expanded its European line-up of sustainable thematic ETFs with two new funds targeting the ‘Future of Food’ and ‘Health and Wellness’ investment themes.
Caroline Baron, Head of ETF Distribution, EMEA, Franklin Templeton.
The Franklin Future of Food UCITS ETF (FRFD LN) and Franklin Future of Health and Wellness UCITS ETF (FRHW LN) have been listed on London Stock Exchange in US dollars and pound sterling as well as on Deutsche Börse Xetra in euros.
A cross-listing on Borsa Italiana in euros is also expected later this month.
The Franklin Future of Food UCITS ETF invests in companies within the global food industry that are helping to create a sustainable food ecosystem by utilizing innovative technologies and efficient production and supply practices.
The fund seeks to tap into a secular growth story driven by global population growth and the subsequent need and challenges of increasing food production. Franklin Templeton highlights research from EIT Food that estimates food production will need to increase by 60% by 2050 to feed a global population of around 10 billion people.
The Franklin Future of Health and Wellness UCITS ETF, meanwhile, provides exposure to innovative healthcare companies as well as firms that are enabling access to care and wellness products and services for a wide range of consumers including the elderly.
With human life expectancy increasing, demand for more frequent medical care and wellness activities is also expected to rise, creating significant opportunities for companies within healthcare innovation industries. According to a report from the Global Wellness Institute and Biospace, the wellness market is projected to grow from $4.4 trillion in 2020, or 5% of global economic output, to $6.8 trillion by 2030.
Caroline Baron, Head of ETF Distribution, EMEA, Franklin Templeton, commented: “These two new sustainable ETFs offer access to secular growth stories and, by investing in innovative companies and potential disruptors, have the potential to outperform traditional indices. Franklin Templeton is a leader in thematic and technology investing and allocating to these ETFs is an attractive means of portfolio diversification for investors, given their unique exposure.”
Methodologies
The Franklin Future of Food UCITS ETF and Franklin Future of Health and Wellness UCITS ETF are linked to the Solactive Sustainable Food Index and Solactive Sustainable Health and Wellness Index, respectively.
The indices select their constituents from an initial universe of developed market stocks with market capitalizations above $100 million and average daily trading volumes greater than $1m. Violators of UN Global Compact principles, companies with no female board members, and firms with business activities linked to controversial weapons, firearms, tobacco, alcohol, and fossil fuels are removed from the selection pool.
Another screen removes companies with very poor environmental rating profiles as well as firms with carbon emissions above their peer average.
Security selection is then driven by Solactive’s proprietary natural language processing algorithm, called ARTIS, which identifies firms linked to a specific theme by screening publicly available information such as financial news, business profiles, and company publications for appropriate keywords.
For the Solactive Sustainable Food Index, ARTIS targets companies engaged in industries such as agriculture machinery, smart farming, aquaculture, and sustainable and healthy food. Identified firms must also make a direct positive contribution to at least one of the following United Nations’ Sustainable Development Goals (SDGs): SDG 2 (Zero Hunger), SDG 9 (Industry, Innovation & Infrastructure), SDG 12 (Responsible Consumption & Production), SDG 13 (Climate Action), SDG 14 (Life Below Water), or SDG 15 (Life On Land).
For the Solactive Sustainable Health and Wellness Index, ARTIS targets companies operating in areas such as genomics, medical imaging, e-healthcare, mind and body wellness, senior diseases, and independent aging. Eligible firms must also make a direct positive contribution to UN SDG 3 (Good Health and Well-being).
Chosen constituents are weighted using a combination of float-adjusted market capitalization and a thematic relevance score. Any single stock is capped at a maximum weight of 5%.
Each ETF comes with an expense ratio of 0.30% and is classified as an Article 8 product under the European Union’s Sustainable Finance Disclosure Regulation (SFDR).
Credit:Source link
