Franklin Templeton Bets On Muni Market Momentum With 5 New Tax-Exempt ETFs

Franklin Templeton upped the ante in its ETF expansion with five new municipal bond funds each offering a different flavor of tax-free income for investors navigating an uncertain rate environment. The launches underscore the growing appetite for tax-efficient yield amid persistent market volatility.

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Core And High-Yield Income Alternatives

Leading the pack is the Franklin Municipal Income ETF (FTMU) , which is built to provide regular and sustainable, federally tax-exempt income, along with preserving capital. The fund has an expense ratio of 0.30% and will primarily be committed to investment-grade munis with intermediate-to-long duration but can take limited exposures in BB-rated bonds to enhance yield.

The Franklin Municipal High Yield ETF (FTMH) targets the high-yield muni segment, which may offer stronger returns but at the cost of higher credit risk. This fund charges 0.35% and also focuses on intermediate- to long-term securities.

Those looking for stability over higher yields might opt for the Franklin Short-Term Municipal Income ETF (FTMS) . With a 0.20% expense ratio, FTMS aims to provide tax-free income and capital preservation through short-term, investment-grade muni holdings.

Specialized State-Focused Funds

Rounding out the lineup are two geographically targeted funds that take advantage of state-specific tax benefits. The Franklin New York Municipal Income ETF (FTNY) seeks to provide income that is exempt from federal, New York State and New York City taxes, with an expense ratio of 0.35%. At least 90% of the fund's income is expected to be exempt from all three layers of taxation.

Meanwhile, the Franklin California Municipal Income ETF (FTCA) provides income exempt from federal and California state taxes, with a 0.35% fee. Like FTNY, about 90% of its revenue is expected to qualify for the double tax exemption.

A Broader Bet On Muni Momentum

With yields still hovering near multi-year highs, municipal bonds continue to attract investors seeking tax-efficient returns. Franklin Templeton’s latest suite of ETFs adds flexibility to that pursuit, giving income seekers multiple routes to tailor their muni exposure-whether they favor short-term safety, high-yield punch, or state-specific advantages.

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