Franklin Intelligent Machines ETF

Franklin Intelligent Machines ETF (IQM) is an actively managed Franklin Templeton fund. As of June 30, 2026, it held 76 stocks tied to automation, chips, industrial software and artificial intelligence. Its managers pick stocks through their own research and do not track an index. It costs 0.50% a year, above the 0.44% average of similar funds. It paid no distributions in the year to October 27, 2026, and its price has swung much harder than the broad market.

• Over the year to Oct 27, 2026, IQM returned +5.2%, 8th of 9 among similar funds.
• Its 5-year annualized return was +13.4%.
• Its worst full calendar year was 2022 (-33.4%); its best was 2023 (+41.1%).
• The deepest fall in its price history was 44.9% (Nov 19, 2021 to Oct 14, 2022), recovered by Mar 1, 2024.

No distribution history is available for this fund.

As of Jun 30, 2026, the fund held 76 securities; the ten largest made up 42.38% of assets, and 2.8% sat in cash and money-market holdings.

By sector

• Over the three months to Jun 30, 2026, investors added a net $13.2M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +22.26%, +8.61%, +5.70%.

IQM does not track an index. Franklin Templeton's managers must keep at least 80% of net assets in companies tied to the fund's "intelligent machines" theme. These are firms the managers believe focus on, or stand to gain from, technology that changes how products are designed, made, shipped and maintained, including through artificial intelligence. The prospectus names four areas: intelligent design (simulation and computer-aided design software), intelligent production (factory automation), intelligent products (robotic-assisted tools) and predictive maintenance (industrial software that spots problems before machines fail). The fund can buy companies of any size, sector or country, including emerging markets. It expects to hold a large share in information technology.

Stock picking is "bottom-up." That means the managers study individual companies first instead of starting from an economic forecast. No formula sets the weights, and there is no fixed rebalancing date. The managers may sell a stock when it hits its price target or size limit, when its business weakens, when policy changes hurt its outlook, or when a better opportunity turns up. Portfolio turnover was 33%. The fund is "non-diversified," which means it can put more money into fewer companies than a typical fund.

As of June 30, 2026, the top 10 holdings made up 42% of the fund. The largest were NVIDIA (6.6%), Taiwan Semiconductor (6.1%), Sandisk (5.5%), Celestica (4.3%) and Broadcom (4.0%). About 70% was in US companies, and the fund held no derivatives.

• IQM charges 0.5% a year, versus an average of 0.44% for the similar funds below (6th of 9, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $51 in the first year and $629 over 10 years (assuming a 5% annual return).

Its tight focus on chips and automation, its concentrated stock list and past drops of more than 40% make it a higher-risk add-on, not a foundation.

IQM could add a concentrated position in chips and automation next to broader funds, but its swings have been severe. Its deepest drop, 44.9%, ran from November 19, 2021, to October 14, 2022, and it did not regain its peak until March 1, 2024. In the 2022 bear market it fell 40.4%, and 2022 was its worst calendar year, with a 33.14% loss. It has no record from 2008, and its price history starts after the 2020 crash. Someone who had to sell shares in a year like 2022 would have locked in deep losses.

It paid no distributions in the year to October 27, 2026, so it provides no income. It costs 0.50% a year. In the SEC's standard example, $10,000 invested would cost $629 over 10 years. Past results don't predict future returns, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.