Exploring the World of Single-Country ETFs: A Deeper Dive into Franklin’s Offerings
In the vast landscape of exchange-traded funds (ETFs), there’s a growing trend among investors to narrow down their international exposure by splitting it into single-country ETFs. This strategy, which is often seen as an alternative to holding broad-market international ETFs like Vanguard FTSE All-World U.S. Ex-U.S. Index Fund (VXUS), comes with several advantages. Let’s take a closer look at these benefits and explore a portfolio of 13 single-country ETFs offered by Franklin Templeton.
Advantages of Single-Country ETFs
1. Tax Loss Harvesting: By investing in single-country ETFs, investors can more effectively implement tax loss harvesting strategies. This technique involves selling losing securities to offset gains in other parts of their portfolio, thereby reducing their overall tax liability. Since each single-country ETF is a separate investment, it’s easier to sell losing positions in one country without affecting the overall international allocation.
2. Optimal Asset Location: Another advantage of single-country ETFs is the ability to optimally locate assets based on specific tax considerations. For instance, an investor might choose to hold more tax-efficient ETFs in taxable accounts and tax-inefficient ones in tax-advantaged retirement accounts.
3. Excluding Exposures: Lastly, single-country ETFs allow investors to exclude certain country exposures that they believe are better owned elsewhere. For example, an investor may prefer to hold a developed market ETF for their European exposure and a separate emerging market ETF for their Asian exposure.
Franklin’s Single-Country ETF Portfolio
Franklin Templeton offers a range of single-country ETFs, each focusing on a specific market. Here’s a list of 13 Franklin ETFs and their weighted average expense ratios:
- Franklin FTSE Brazil iShares ETF (FLBR): 0.52%
- Franklin FTSE Chile iShares ETF (FL): 0.47%
- Franklin FTSE Colombia iShares ETF (GCOL): 0.49%
- Franklin FTSE South Korea Capped iShares ETF (SKOR): 0.43%
- Franklin FTSE Taiwan iShares ETF (FTW): 0.48%
- Franklin FTSE Thailand iShares ETF (THD): 0.52%
- Franklin FTSE Hong Kong iShares ETF (FHK): 0.48%
- Franklin FTSE Singapore iShares ETF (FSIN): 0.48%
- Franklin FTSE Australia iShares ETF (FAUS): 0.48%
- Franklin FTSE Canada iShares ETF (FCE): 0.39%
- Franklin FTSE Europe ex-UK iShares ETF (FLXE): 0.18%
- Franklin FTSE Switzerland iShares ETF (FLWS): 0.39%
These ETFs provide exposure to a diverse range of developed and emerging markets, offering investors the flexibility to build a well-diversified international portfolio while enjoying the benefits of tax loss harvesting, optimal asset location, and excluding unwanted exposures.
Impact on Individual Investors
For individual investors, the adoption of single-country ETFs can lead to more effective tax management and a better understanding of their international exposure. By investing in single-country ETFs, investors can make informed decisions about which countries to include in their portfolio based on their individual tax situations and investment goals.
Impact on the World
At a global level, the growing popularity of single-country ETFs could lead to increased transparency and efficiency in international markets. As more investors seek to gain exposure to specific countries, market liquidity may improve, making it easier for investors to enter and exit positions. Additionally, this trend could encourage greater competition among ETF issuers, leading to lower fees and improved product offerings.
Conclusion
Single-country ETFs offer investors a unique way to gain exposure to international markets while enjoying the benefits of tax loss harvesting, optimal asset location, and excluding unwanted exposures. With a wide range of single-country ETFs available from issuers like Franklin Templeton, investors can build a well-diversified portfolio tailored to their individual tax situations and investment goals. As the adoption of single-country ETFs continues to grow, we may see increased market transparency, improved liquidity, and greater competition among issuers, ultimately benefiting investors and the global financial markets as a whole.
