Franklin Templeton has temporary trimmed the fee for its Paris Climate Agreement-screened S&P 500 ETF.
Franklin Templeton is temporarily trimming the fee on one of its leading climate change-focused exchange-traded funds (ETFs), bringing its yearly fee to single digit levels.
The Franklin S&P 500 Paris Aligned Climate ETF (LSE: 500P) will cut its fee (it uses the total expense ratio charging method) from 0.15% to just 0.07%. It is important to note that the fee cut is only temporary. The fee cut will apply until 31 May 2022. After that date, the fee will potentially return to 0.15%, or at least be raised higher than 0.07%.
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The temporary fee cut brings the fee down to levels charged by big-name ETF providers offering access to the US market. For example, the iShares Core S&P 500 ETF USD GBP (LSE:IUSA) has an ongoing charge of 0.07%.
However, the Franklin S&P 500 Paris Aligned Climate UCITS ETF, as the name suggests, uses an environmental screen. This ETF is one of several that use a screen to ensure that companies in the portfolio are aligned with the Paris Climate Agreement goal to limit the increase in global average temperatures to below 2°C above pre-industrial levels.
Typically, environmentally screened indices are more expensive to track.
For example, the iShares MSCI USA SRI ETF (LSE:SUAS), has an ongoing charge of 0.20%. Meanwhile, the Xtrackers MSCI USA ESG ETF 1C GBP (LSE:XESU) charges 0.15%. So the new fee charged by the Franklin S&P 500 Paris Aligned Climate ETF is now below similar ETFs.
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