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Franklin Templeton will liquidate two actively managed bond exchange-traded funds this summer, shuttering the Western Asset Short Duration Income ETF (WINC) and the Western Asset Total Return ETF (WBND) after they failed to gain investor traction.
The fund's board of trustees approved the liquidation on May 21, according to a company release. Both ETFs will cease trading on the Nasdaq prior to market open on Aug. 23, with final liquidation proceeds distributed to shareholders on Aug. 29.
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The liquidation highlights the challenge ETF issuers face in a crowded fixed-income market, where funds must continue to attract assets to remain economically viable. WINC managed just $12.1 million in assets under management despite posting a 2.2% year-to-date return, according to FactSet data. The fund targets USD-denominated corporate debt securities with durations of three years or less and charges a 0.29% expense ratio.
WBND attracted $11.9 million in assets while generating a 1.6% year-to-date return, according to the data. The broader-mandate fund invests across fixed-income securities globally with few constraints and carries a 0.45% expense ratio.
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Both funds experienced outflows recently, according to FactSet. WBND saw $996,000 in net outflows over the past month and $7.9 million in year-to-date outflows. WINC recorded just over $2,000 in monthly outflows but managed $9,600 in year-to-date inflows.
Creation orders will no longer be accepted after Aug. 1, according to the filing. Shareholders can sell shares until market close on Aug. 22, or receive cash equal to net asset value during liquidation.
During the liquidation process, which will begin prior to Aug. 23, the funds will hold cash and securities that may not align with their stated investment objectives and strategies, according to the release. The funds may declare taxable distributions of income and capital gains in connection with the liquidation.
Franklin Templeton, with $1.5 trillion in assets under management as of April 30, operates across equity, fixed income, alternatives and multi-asset solutions through specialist investment managers, according to the announcement.