Franklin High Yield Corporate ETF

Franklin High Yield Corporate ETF (FLHY) is an actively managed fund of below-investment-grade corporate bonds, often called junk bonds. Franklin Templeton's analysts pick the bonds instead of tracking an index. It pays income monthly, and its trailing 12-month yield was 6.7% as of October 27, 2026. Its 0.40% expense ratio is well above rivals such as SPHY at 0.05%. Even so, its three-year return ranked first among eight similar funds.

• Over the year to Oct 27, 2026, FLHY returned +2.4%, 2nd of 8 among similar funds.
• Its 5-year annualized return was +4.4%.
• In the 2020 COVID crash it fell 22.4% and regained its old high 4 months after the low.
• Its worst full calendar year was 2022 (-10.4%); its best was 2019 (+16.4%).
• The deepest fall in its price history was 22.6% (Feb 12, 2020 to Mar 23, 2020), recovered by Jul 29, 2020.

As of Jun 30, 2026, the fund held 289 securities; the ten largest made up 8.45% of assets, and 2.11% sat in cash and money-market holdings.

The bonds mature in 5.4 years on average (weighted by size), with an average coupon of 7.1%.

• Over the three months to Jun 30, 2026, investors added a net $308.6M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +1.62%, +0.56%, +0.15%.

FLHY does not follow an index. Under normal conditions it puts at least 80% of its net assets into high-yield corporate debt. These are bonds rated BB+ or lower by S&P or Ba1 or lower by Moody's, or unrated bonds the manager judges to be of similar quality. The fund can also hold notes, convertible bonds, and bank and corporate loans. That includes "covenant-lite" loans, which give lenders fewer protections. It may own debt rated below B and even debt in default. Bonds can be of any maturity, from US or foreign issuers, including emerging markets.

Franklin Templeton's analysts research one company at a time, using both judgment and quantitative models. They also weigh sectors. They do their own credit analysis instead of relying on rating agencies. They look at each issuer's management, how sensitive it is to the economy, and its financial health. They may sell a bond when its price passes their fair-value target, when the issuer's credit outlook gets worse, or when a more attractive bond appears. Portfolio turnover was 36%.

The fund may use currency forwards and interest rate or credit default swaps to hedge risks or add exposure. It held no derivatives as of June 30, 2026. On that date it had about 290 positions, and the top ten made up 8.45% of assets. The bonds had an average maturity of 5.4 years and an average coupon of 7.1%.

• FLHY charges 0.4% a year, versus an average of 0.31% for the similar funds below (5th of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $41 in the first year and $506 over 10 years (assuming a 5% annual return).

FLHY pays monthly and its yield was 6.7% as of October 27, 2026, but junk-bond credit risk makes it a source of income, not a safe anchor.

FLHY could add monthly income. Its trailing 12-month payout was $1.58 a share, a 6.7% yield, as of October 27, 2026. That income comes with sharp drops in bad markets. The fund launched in May 2018, so it has no record from 2008. In the 2020 COVID crash it fell 22.6% from peak to trough, then recovered in about four months. In 2022 it fell 14.9% and took about 14.5 months to recover. Its worst calendar year was 2022, at -10.44%. Selling shares in a year like that would lock in losses, and defaults could reduce the payouts. In the SEC's standard example, $10,000 costs about $41 in the first year and $506 over ten years. Its 0.40% fee is above the 0.31% average of 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).