The combination of a middling Process Pillar rating and a Below Average People Pillar rating limit  Franklin Focused Growth ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The team managing the strategy earns a Below Average People Pillar. The strategy gets an Average Process Pillar rating.  High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And momentum exposure is rooted in holding stocks currently on a winning streak. The strategy's parent organization earns the firm an Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

NVIDIA

Microsoft

Amazon

Costco

Alphabet

ServiceNow

Mastercard

Cadence Design Systems

Eli Lilly

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Franklin Focused Growth ETF earns an Average Process Pillar rating. 

The predominant contributor to the rating is the stability of the management team. Specifically, the fund has not seen a manager change in the last eight years. Management team experience, which averages 25 years at this fund, also bolsters the process. Lastly, the process is limited by its parent firm's disappointing risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.5 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 This strategy has tended to hold more growth stocks than others in the Large Growth Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Looking at additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also had more exposure to high-momentum stocks in recent years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. During the last few years, this strategy has also tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. In this month, the strategy also had more exposure to the Quality factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in technology by 11.8 percentage points in terms of assets compared with the category average, and its consumer defensive allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and financial services, underweight the average by 5.0 and 3.1 percentage points of assets, respectively. The portfolio is positioned across 32 holdings and is quite concentrated. In particular, 68.6% of the portfolio's assets are housed within the top 10 holdings, as opposed to the category’s 53.2% average.

Average

Process

Franklin Focused Growth ETF earns a Below Average People Pillar rating. The team is strengthened by the experience of the management team, which averages 25 years at this fund. However, the rating is limited by the parent firm's five-year success ratio of 36%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The small size of its portfolio management team of one also holds the team back.

Below Average

People

Franklin Templeton Investments, the asset-management arm of publicly traded but family managed Franklin Resources BEN, has been busy with acquisitions. The struggle in streamlining these disparate capabilities underpins its Average Parent rating. 
Franklin’s July 2020 acquisition of multiboutique manager Legg Mason remains its largest as of March 2023, but the firm has continued to grow through acquisitions. Its April 2022 and November 2022 purchases of Lexington Partners and Alcentra, respectively, make it one of world’s largest managers of alternative investments (with alts comprising USD 231 billion of its USD 1.4 trillion assets under management as of December 2022), while its July 2022 acquisition of O’Shaughnessy Asset Management adds a novel direct-indexing capability to its managed account offerings. These purchases, however, do little to alleviate the operational complexity of a firm with dozens of investment teams split by asset class, region, and investment platform.   
Although there are several standout strategies at the firm, many teams have struggled with personnel turnover, succession challenges, and unappealing performance patterns. Shepherding these geographically disparate capabilities, which have varying levels of centralization of distribution and risk management, shall be quite the challenge for the firm to manage.

Parent

Franklin Focused Growth ETF

FFOG actively invests in equities perceived to have strong fundamentals and prospects for growth. The fund does not limit investments to any particular market-cap, industry or geography.

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SAN MATEO, Calif.--(BUSINESS WIRE)--Franklin Templeton today launched Franklin Focused Growth ETF on CBOE under the ticker FFOG. FFOG aims to provide capital appreciation by investing in growth equity securities. This ETF was converted from a mutual fund, and it maintains the predecessor Franklin Focused Growth Fund's investment goal, principal investment strategies, performance benchmark, investment adviser and portfolio management team. One difference from the predecessor mutual fund is that.

Franklin Templeton Launches Franklin Focused Growth ETF (FFOG)

News for Franklin Focused Growth ETF ETF (FFOG)