Mutual fund provider Franklin Templeton is testing the waters in the exchange traded funds space, launching its first fund, an actively managed short-term U.S. bond offering.
FTSD tries to generate a high level of current income through "prudent investing" while preserving capital, according to an updated SEC filing. The active fund has a 0.30% expense ratio.
Roger Bayston, CFA Senior Vice President of Advisers, and Patrick Klein, PH.D. Portfolio Manager of Advisers, will both manage the Franklin Templeton ETF.
The ETF will consist of investment-grade securities issued by the U.S. government and related agencies with an average duration of three or less years. The majority of holdings will include mortgage-backed securities, including adjustable rate mortgage securities.
The new Franklin Templeton ETF will compete against similar actively managed short-duration bond ETFs like the PIMCO Enhanced Short Maturity ETF (NYSEARCA:MINT), Guggenheim Enhanced Short Duration Bond (NYSEARCA:GSY), SPDR SSgA Ultra Short Term Bond ETF (NYSEARCA:ULST) and iShares Short Maturity Bond ETF (BATS:NEAR).
Franklin Templeton is just one of many other large mutual fund providers with SEC approval to launch ETF products.
Max Chen contributed to this article.