Western Asset Bond ETF earns a Morningstar Medalist Rating of Neutral with strength in areas such as People offset by weaker spots such as Process. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy gets a Below Average Process Pillar rating. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, repeatable execution. Western Asset Bond ETF earns a Below Average Process Pillar rating.    The process benefits from 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 risk-adjusted success ratio of 37%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's subpar risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.5 stars, also holds the process back. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 Compared with other funds in the Intermediate Core-Plus Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Moreover, it has no significant biases in terms of credit quality, bond sectors, or maturity when compared to its category peers in recent years.   

  The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BBB.

Below Average

Process

Western Asset Bond ETF earns an Above Average People Pillar rating. The team is backed by S. Kenneth Leech, the longest-tenured manager on the strategy, who provides over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.4 stars, reflecting below-average risk-adjusted performance versus category peers. The team is composed of a solid supporting cast of six additional named managers, averaging over 25 years of listed portfolio management experience. As a team, they manage four investment vehicles together, with a Neutral asset-weighted average Morningstar Medalist Rating, indicating the team will struggle to deliver positive alpha in aggregate. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Above 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.

Average

Parent

Western Asset Bond ETF

WABF actively manages a portfolio comprised of USD-denominated debt instruments and fixed income securities of various maturities, with limited exposure to high yield, emerging market debts, and structured securities. The fund intends to use derivatives to gain exposure, manage risks, and enhance returns.

Bondbloxx USD High Yield Sector Rotation

Parabla Innovation Etf

AdvisorShares Newfleet Multi-Sector Income ETF

Strategy Shares Halt Climate Change ETF

Principal International Adaptive Multi-Factor ETF

Highland iBoxx Senior Loan ETF

SPDR S&P 500 ETF Trust

FT Cboe Vest US Equity Moderate Buffer ETF - September

Subversive Cannabis ETF

FT Cboe Vest US Equity Buffer & Premium Income ETF - September

Invesco BulletShares 2033 Corporate Bond ETF

Invesco BulletShares 2031 High Yield Corporate Bond ETF

Invesco BulletShares 2033 Municipal Bond ETF

Marketdesk Focused US Dividend ETF

Amplify Cash Flow High Income Etf

The week ending Sept. 22 marks a strong post-summer resurgence for the industry, with 25 new ETF launches in all.

This Week in ETFs: Launches Ramp Up

SAN MATEO, Calif.--(BUSINESS WIRE)--Franklin Templeton continues to grow its active fixed income exchange-traded fund (ETF) lineup with today's launch of Western Asset Bond ETF on Nasdaq under the ticker WABF. WABF is actively managed by Western Asset, a leading fixed income manager and specialist investment manager of Franklin Templeton. “Last year was extremely challenging for bond investors, but the silver lining of the recent rough patch is that bond yields and valuations have been restored.

News for Western Asset Bond ETF ETF (WABF)