Franklin U.S. Core Bond ETF

Franklin U.S. Core Bond ETF (FLCB) is an actively managed fund of high-quality U.S. bonds, including Treasurys, corporate bonds and mortgage-backed securities. Its benchmark is the Bloomberg U.S. Aggregate Index. Its managers can shift its sector, credit and interest-rate exposure away from that benchmark. That flexibility costs 0.15% a year, against 0.03% for AGG and BND. The fund also trailed its index over the five years through December 31, 2025.

• Over the year to Oct 27, 2026, FLCB returned -1.2%, 7th of 8 among similar funds.
• Its 5-year annualized return was -0.4%.
• In the 2020 COVID crash it fell 7.1% and regained its old high 2.4 months after the low.
• Its worst full calendar year was 2022 (-13.6%); its best was 2020 (+7.7%).
• The deepest fall in its price history was 18.9% (Aug 4, 2020 to Oct 24, 2022), not yet recovered.

As of Jun 30, 2026, the fund held 588 securities; the ten largest made up 21.38% of assets, and 3.93% sat in cash and money-market holdings.

The bonds mature in 15.5 years on average (weighted by size), with an average coupon of 3.92%.

• Over the three months to Jun 30, 2026, investors added a net $192.9M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.12%, +0.31%, +0.26%.

FLCB is actively managed, so it does not copy an index. In normal conditions it keeps at least 80% of net assets in bonds of U.S. issuers. These include Treasurys, corporate debt, mortgage-backed securities (pools of home loans) and asset-backed securities (bonds backed by loans, leases and other receivables). It mostly buys investment-grade bonds, meaning bonds rated BBB- or better by S&P, or Baa3 or higher by Moody's, at the time of purchase. Its benchmark is the Bloomberg U.S. Aggregate Index. The fund's sector, credit and duration (interest-rate sensitivity) exposures are generally expected to resemble the index's, but they can differ.

Franklin Templeton's managers combine a top-down view of economic trends with bottom-up research on sectors, industries and issuers. They may also use quantitative models. There is no fixed weighting or rebalancing schedule. They sell a bond when they think it is fully valued or when a better opportunity appears. The prospectus lists portfolio turnover of 42%.

Some of the mechanics add complexity. The fund buys agency mortgage securities in the to-be-announced (TBA) market, where trades settle at a later date, and it uses mortgage dollar rolls. It can also hold CDOs (pools of loans sliced into layers of risk). It can use Treasury futures, interest rate swaps and credit default swaps, which may add leverage. As of June 30, 2026, its debt holdings came to about 109% of net assets, spread across 599 positions.

• FLCB charges 0.15% a year, versus an average of 0.06% for the similar funds below (8th of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $15 in the first year and $191 over 10 years (assuming a 5% annual return).

It holds a broad, mostly investment-grade mix of Treasurys, agency mortgages and corporate bonds, and its benchmark is the Bloomberg U.S. Aggregate Index.

FLCB could anchor the bond side of a portfolio. As of June 30, 2026, about 32% was in Treasurys and 24% in bonds from government-sponsored enterprises. It launched in 2019, so it has no 2008 record. It fell 7.1% in March 2020 and recovered in about 2.4 months. Rising rates hurt more: it lost 13.57% in 2022, and that year's 15.2% slide took about 36 months to recover. Its deepest drop, 18.9% from an August 2020 peak, had not been fully recovered as of October 27, 2026. Anyone who had to sell in a year like 2022 would have locked in losses. It pays monthly, with a 4.53% trailing 12-month yield as of October 27, 2026. Its 0.15% fee is above the 0.06% average for similar funds. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).