Franklin International Aggregate Bond ETF

Franklin International Aggregate Bond ETF (FLIA) is an actively managed fund of mostly investment-grade bonds issued outside the US, chiefly by governments such as Germany, the UK, Japan and China. It aims to hedge most of its currency exposure back to the dollar, so its returns depend mainly on foreign interest rates and less on exchange rates. Its 0.25% expense ratio is below the 0.29% peer average but well above the 0.07% charged by IAGG and BNDX.

• Over the year to Oct 27, 2026, FLIA returned +0.8%, 1st of 8 among similar funds.
• Its 5-year annualized return was +0.9%.
• In the 2020 COVID crash it fell 6.9% and regained its old high 66.9 months after the low.
• Its worst full calendar year was 2022 (-7.6%); its best was 2019 (+7.6%).
• The deepest fall in its price history was 11.3% (Mar 9, 2020 to Oct 12, 2022), recovered by Oct 14, 2025.

As of Jun 30, 2026, the fund held 67 securities; the ten largest made up 30.23% of assets, and 3.2% sat in cash and money-market holdings.

The bonds mature in 7.2 years on average (weighted by size), with an average coupon of 2.42%.

• Over the three months to Jun 30, 2026, investors added a net $39.7M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.40%, +0.89%, +0.53%.

FLIA does not track an index. Franklin Templeton's managers decide what to own based on their view of interest rates, exchange rates and credit risk, sometimes with help from their own quantitative models. At least 80% of assets go into bonds or bond exposure from issuers in at least three countries outside the US. The focus is investment grade (the top four rating categories), but up to 20% can go into lower-rated bonds. There is no limit on emerging markets. The fund is "non-diversified," which means it can concentrate in fewer issuers.

As of June 30, 2026, the fund held 99 positions from 67 issuers. Foreign governments made up 77.87% and companies 8.39%. The largest holdings were a 2.5% German Bund due 2035 (3.6%), a 4.75% UK gilt due 2030 (3.4%) and a 0.75% Swedish government bond due 2028 (3.3%). China was the biggest country weight at 13.7%. Average maturity was 7.2 years.

Currency hedging is central to the fund. The managers use forwards, options, swaps and futures to offset foreign-currency moves, and can also take deliberate long or short currency positions. These trades can make up a large share of returns. There is no set rebalancing schedule. The managers move maturity and country weights as their outlook changes, and turnover was 32%.

• FLIA charges 0.25% a year, versus an average of 0.29% for the similar funds below (3rd of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $26 in the first year and $318 over 10 years (assuming a 5% annual return).

It holds mostly foreign government bonds from places such as China, the UK, Japan and the European Union, and generally aims to hedge currency swings back to US dollars, so it can spread a bond allocation beyond the US.

FLIA launched in May 2018, so its record doesn't cover the 2008 crisis. It fell 6.9% in March 2020 and 7.9% in the 2022 bear market, when it lost 7.40% for the year, its worst calendar year. Its deepest drop, 11.3% from March 9, 2020 to October 12, 2022, was not fully made up until October 14, 2025. Selling shares in that stretch would have locked in losses that took years to earn back.

Over the 12 months to October 27, 2026, it yielded 3.32%, paid quarterly. The 0.25% expense ratio comes to $26 in the first year and $318 over 10 years on $10,000 in the SEC's standard example. That is below the 0.29% average for similar funds but well above the 0.07% charged by IAGG and BNDX. 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).