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

 The team managing the strategy earns a Below Average People Pillar. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable underweight position in quality exposure and has an overweight in volatility exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. 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

Microsoft

MongoDB

Datadog

CrowdStrike

ServiceNow

Palo Alto Networks

Alphabet

Fair Isaac

Equinix

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 Exponential Data ETF earns an Average Process Pillar rating. 

The most notable contributor to the rating is the experience of the management team, which averages 25 years at this fund. Low expenses across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also contribute to the process. The pattern of low fees at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by its parent firm's subpar 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 tends to hold smaller, higher-growth companies than its average peer in the Technology Morningstar Category. Looking at additional factor exposure, this strategy has consistently favored low-quality stocks compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. This is a higher-risk, higher-reward approach. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, the portfolio has tended to underweight yield, as shown in its lower exposure to companies that pay dividends or buy back shares than peers over these years. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide steady income payments, they may cut payouts if their earnings fall. In recent months, the strategy also had less Yield factor exposure than 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 real estate and financial services relative to the category average by 6.1 and 3.6 percentage points, respectively. The sectors with low exposure compared to category peers are technology and consumer cyclical, underweight the average by 5.2 and 4.4 percentage points of assets, respectively. The portfolio is composed of 47 holdings and is similarly diversified as peers, with 52.3% of portfolio assets concentrated within the top 10 holdings.

Average

Process

Franklin Exponential Data ETF earns a Below Average People Pillar rating. The team is bolstered by the experience of the management team, which averages 25 years at this fund. However, the rating is weakened by the parent firm's five-year success ratio of 36%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's subpar 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 Exponential Data ETF

XDAT is actively-managed to invest in global companies believed to benefit from or facilitate Big Data and its applications such as AI, augmented and virtual reality, software-as-a-service, and personalized advertising and healthcare.

In a notable contrast to last year, and perhaps somewhat unexpectedly, it's been tech names that have buoyed the S&P 500 amid the bank drama that roiled markets over the last few weeks.

Active Tech ETFs Can Ride E-Commerce Megatrend

Amplify AI Powered Equity ETF

WisdomTree International AI Enhanced Value Fund

ARK Industrial Innovation ETF

BTD Capital Fund

MerlynAI SectorSurfer Momentum ETF

Advisorshares Let Bob AI Powered Momentum ETF

Teucrium Aila Long-Short Agriculture ETF

Defiance Quantum ETF

Merlyn AI Bull-Rider Bear-Fighter ETF

ETFs focused on artificial intelligence are popular right now, but there's a wide gulf between ETFs that use AI to invest and ETFs that invest in companies that benefit from or work on AI technologies. Let's drill deeper into the difference between the two.

Artificial Intelligence ETFs, or ETFs Powered by Artificial Intelligence?

Finding the right tech ETF right now isn't the most straightforward task for investors and advisors as rates rise and recession looms, but there are tech subsectors with some interesting opportunities. Data sciences might be one, with database company MongoDB (MDB) skyrocketing behind positive earnings news.

Play This Rocketing Stock in XDAT

Global X Cybersecurity ETF

Direxion Moonshot Innovators ETF

WisdomTree Cybersecurity Fund

WisdomTree Cloud Computing Fund

Technology Select Sector SPDR Fund

There could be a sustained tech rally, per CNBC's Jim Cramer. Here's why.

Could a Sustained Tech ETF Rally Be in the Cards?

iShares Cloud 5G and Tech ETF

KraneShares CICC China 5G & Semiconductor Index ETF

First Trust Indxx NextG ETF

Direxion Daily 5G Communications Bull 2X Shares

AXS Esoterica NEXTG Economy ETF

The potential value of and uses for 5G in the enterprise (private 5G) are abundantly clearer - especially in the near term - than they are for consumers. The results from a recent study that surveyed 400 US-based IT decision makers about their current and/or planned usage of private cellular networks confirm those thoughts to a degree.

New Research Highlights Opportunities And Challenges For Private 5G

Several of the top holdings within the Franklin Exponential Data ETF (XDAT) have recently announced new achievements or offerings, which should impact the actively managed Franklin Templeton fund. Fortinet (NASDAQ: FTNT), a global provider of broad, integrated, and automated cybersecurity services, recently launched FortiNDR, a new network detection and response offering that leverages powerful artificial [.

XDAT Holdings See Major Achievements

First Trust TCW Opportunistic Fixed Income ETF

Fidelity Magellan ETF

Blackrock World EX US Carbon Transition Readiness ETF

Blackrock US Carbon Transition Readiness ETF

A strong first half saw more than 200 ETF launches.

Breaking Down 1H 2021 ETF Launches

ARK Space Exploration & Innovation ETF

JPMorgan ActiveBuilders International Equity ETF

JPMorgan ActiveBuilders U.S. Large Cap Equity ETF

ALPS Active REIT ETF

The first half of 2021 brought a torrid pace of exchange traded funds debuts, with 200 rookie ETFs coming to market. As CFRA Research Director of ETF & Mutual Fund Research Todd Rosenbluth points out, more than a quarter of that tally, 51 funds to be precise, debuted in June alone.

Active Funds Are Dominating 2021 ETF Launches

On Thursday, Franklin Templeton announced the expansion of its thematic active ETF lineup with the addition of Franklin Exponential Data ETF (XDAT). XDAT seeks capital appreciation by investing in companies focused on or expected to benefit from the use of large data sets and/or the growth of data, including the creation, collection, cleaning, analyzing, storage, securing, transport, and/or [.

Franklin Templeton Launches New Active ETF, ‘XDAT'

The issuer brings to market another actively managed thematic fund.

Franklin Adds To Thematic ETF Line

SAN MATEO, Calif.--(BUSINESS WIRE)--Franklin Templeton Launches Franklin Exponential Data ETF (XDAT) to Harness Data Transformation

News for Franklin Exponential Data ETF ETF (XDAT)