Franklin’s Muni Bond ETF Leverages a Deep Research Bench

Municipal bonds are known for their tax advantages and low default rates¹. Right now they have a lot to offer investors. However, that particular slice of the market is also quite complex due to the number of securities and issuers in the space representing myriad municipalities. The fact that the U.S. is in an election year further complicates the outlook. Given these factors, an actively managed approach seems a logical way to access the space.

Franklin Dynamic Municipal Bond ETF

Data as of 3/31/2024

Franklin Templeton is uniquely situated to provide such an investment solution largely due to its vast research experience in the municipal bond space, which it has distilled into the Franklin Dynamic Municipal Bond ETF (FLMI), an active fund that leverages the best ideas of Franklin’s municipal bonds research group – available for an expense ratio of 30 basis points.

Optimism Around Municipal Bonds

Muni bonds currently offer attractive yields and credit spreads for investors.

A research note published by Franklin in January cited a “favorable backdrop” paired with “strong credit fundamentals” as reasons to be optimistic about the municipal space, with bonds overall set to benefit from expected monetary easing and falling yields. In particular, Franklin’s muni analysts highlighted state general obligation bonds, land-secured bonds, and charter-school bonds as sectors within the municipal bond category to watch.