Franklin Short Duration U.S. Government ETF

Franklin Short Duration U.S. Government ETF (FTSD) is an actively managed Franklin Templeton bond fund. It holds U.S. Treasuries and government-backed mortgage securities and keeps portfolio duration, a measure of rate sensitivity, at three years or less. Unlike plain short-term Treasury funds, it mixes in mortgage securities, which bring prepayment risk. Its 0.25% expense ratio is close to the 0.27% peer average but far above Vanguard's 0.03% short-term funds.

• Over the year to Oct 27, 2026, FTSD returned +2.2%, 4th of 8 among similar funds.
• Its 5-year annualized return was +2.6% and its 10-year +2.0%.
• In the 2020 COVID crash it fell 1% and regained its old high 0.6 months after the low.
• Its worst full calendar year was 2022 (-3.1%); its best was 2025 (+5.7%).
• The deepest fall in its price history was 5.3% (Feb 5, 2021 to Oct 20, 2022), recovered by Dec 7, 2023.

As of Jun 30, 2026, the fund held 334 securities; the ten largest made up 41.57% of assets, and 7% sat in cash and money-market holdings.

The bonds mature in 11.6 years on average (weighted by size), with an average coupon of 4.65%.

• Over the three months to Jun 30, 2026, investors added a net $13.6M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.33%, +0.22%, +0.20%.

FTSD does not track an index. Its managers choose the bonds. At least 80% of net assets go into securities issued or guaranteed by the U.S. government, its agencies or government-sponsored entities. The fund targets a portfolio duration of three years or less. Duration estimates how much a bond's price moves when interest rates change. The prospectus says the fund generally puts 50–80% of assets in mortgage securities from Ginnie Mae, Fannie Mae and Freddie Mac, and puts the rest in Treasury bonds, notes and bills. Only Ginnie Mae securities carry the full faith and credit of the U.S. government.

As of June 30, 2026, the fund held 334 securities. Treasuries made up 47.7%, government-sponsored enterprises 41.4% and government agencies 7.9%. The largest positions were a 4.25% Treasury note due December 31, 2026 (6.8%), a 4.125% Treasury note due October 31, 2026 (5.1%) and a Fannie Mae 30-year mortgage position (4.8%). The average stated maturity was 11.6 years. Mortgage securities return principal early as homeowners pay down loans, so the fund's duration runs much shorter than that figure.

The managers also buy mortgages for future delivery in the "to-be-announced" (TBA) market, use mortgage dollar rolls and trade Treasury futures to fine-tune duration. Portfolio turnover was 61%.

• FTSD charges 0.25% a year, versus an average of 0.27% for the similar funds below (5th 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 short-duration U.S. government and agency bonds, and its deepest drop since launch was 5.3%.

FTSD launched in November 2013, so it has no record from the 2008 crisis. In the 2020 COVID crash it slipped about 1% between March 6 and March 23, 2020, and recovered by April 9. The 2022 rate shock hit harder: the fund lost 3.13% that year, its worst calendar year. Its deepest drop was 5.3%, from February 2021 to October 2022, and it took about 13.6 months from the low to recover, in December 2023. Someone selling shares in a bad year would have faced a small loss, not a crash, but its value is not fixed.

The trailing 12-month yield was 4.43% as of October 27, 2026, paid monthly. Payouts may fall if rates drop. In the SEC's standard example, $10,000 costs $318 over ten years. 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).