Franklin Templeton has launched Franklin Saudi Arabia Bond Fund, a Luxembourg-registered SICAV, and Franklin FTSE Saudi Arabia UCITS ETF, two new products which offer investors access into the rapidly growing Saudi Arabia market.
Adam Spector, EVP, Global Advisory Services at Franklin Templeton, said: “Franklin Templeton has been a long-term investor both in the region and in Saudi Arabia’s public markets across equities and fixed income for many years. Through its Vision 2030 plan, the country continues to take steps to improve the business environment and diversify its economy away from oil and attract foreign investments.
“As one of the fastest growing economies globally, this is a strategic market for us, and we are excited to offer international investors the opportunity to participate in Saudi Arabia’s growth story.”
Jaspal Sagger, head of global product strategy, Franklin Templeton said: “We are pleased to launch a new actively managed mutual fund focusing on opportunities in the Saudi fixed income market and a new equity ETF providing broad and diversified exposure to the Saudi equity market, the largest equity market in the Gulf region. Investors may choose to utilise these new products to both diversify their portfolios and to access the growth opportunities from this fast-paced developing market.”
The investment objective of the Franklin Saudi Arabia Bond Fund is to maximise total investment return consisting of a combination of income, capital appreciation and currency gains in the long term. The fund seeks to achieve its objective by investing primarily in debt securities and obligations issued by government, government-related or corporate entities located in Saudi Arabia. The Franklin Saudi Arabia Bond Fund will be managed by Dubai-based Mohieddine (Dino) Kronfol, Chief Investment Officer Franklin Templeton Fixed Income, supported by a team of portfolio managers in Riyadh and Dubai.
Kronfol added: “Saudi Arabia represents the Golf Cooperation Countries’ (GCC) largest and fastest growing bond market. Despite this growth, and increasing share of emerging market issuance, debt metrics remain robust and sustainable, on a relative and absolute basis, so that investing in Saudi bonds can potentially deliver attractive returns with valuable diversification benefits.
Saudi Arabia is the largest oil exporter and holds 25% of all conventional reserves in the world. The country will be a key player in the energy transition. It is gradually diversifying away from oil dependency, making it more appealing to foreign investors. Its equity market, which is the largest in the Gulf region, is becoming a larger allocation for emerging markets investors with US $ 2.75 trillion in market capitalisation. While Saudi stocks were restricted to local investors for many years, the equity market has been opening to foreign capital since 2015 and has now grown to a weight of just over 4% in the FTSE Emerging Market Index.
The Franklin FTSE Saudi Arabia UCITS ETF is an index tracking ETF, which provides exposure to large- and mid-sized companies in Saudi Arabia offering investors the opportunity to invest in the largest economy in the Gulf region in a cost-efficient and flexible way at a TER of 0.39%7. It is passively managed and tracks the performance of the FTSE Saudi Arabia 30/18 Capped Index NR (Net Return), which contains 64 large and mid-cap Saudi Arabian equities.
The ETF will be managed by Dina Ting, head of Global Index Portfolio Management, and Lorenzo Crosato, ETF portfolio manager, Franklin Templeton.
The Franklin Saudi Arabia Bond Fund and Franklin FTSE Saudi Arabia UCITS ETF are registered in Austria, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Spain, Sweden and the United Kingdom.
Additionally, the ETF will list on the Deutsche Börse Xetra (XETRA) on 29 October 2024 under ticker FLXS, London Stock Exchange (LSE) on 30 October 2024 under ticker KSA, and Borsa Italiana on 6 November 2024 under ticker SAUDI.
