Franklin Templeton's State Municipal Bond ETFs Hit The Market, Offering Tax-Free Income, Low Fees

Franklin Templeton has expanded its municipal bond ETF suite with the launch of five new single-state municipal income ETFs. This allows investors to gain targeted exposure to tax-free income opportunities.

The new funds, which started trading on Nov 11, are the Franklin Massachusetts Municipal Income ETF (FTMA) , Franklin Minnesota Municipal Income ETF (FTMN) , Franklin New Jersey Municipal Income ETF (FTNJ) , Franklin Ohio Municipal Income ETF (FTOH) , and Franklin Pennsylvania Municipal Income ETF (FTPA) .

? FTMA is testing critical support. Track the latest developments here.

Tax-Free Income, State By State

Each fund seeks to deliver "as high a level of current income exempt from federal and state personal income tax as is consistent with preservation of capital," according to the Oct. 8 prospectus.

The Funds will primarily invest in investment-grade municipal bonds, general obligation, revenue and tender option bonds, issued within their respective states. The funds will each maintain at least 80% of assets in tax-exempt investments, but will only be able to change this policy with shareholder approval.

The new suite carries a 0.35% annual expense ratio across all five funds, placing them competitively within the tax-exempt ETF category.

Conversions From Putnam Funds

Each ETF inherits its corresponding Putnam Tax-Exempt Income Fund’s performance track record through a reorganization completed at launch. For example, the Franklin Massachusetts Municipal Income ETF (FTMA) inherits the history of the Putnam Massachusetts Tax Exempt Income Fund.

Similar transitions apply to the Minnesota, New Jersey, Ohio and Pennsylvania ETFs ? all previously managed by Putnam before its integration into Franklin Templeton.

Portfolio management across the suite will be handled by Franklin Advisers, Inc., with sub-advisory support from Putnam Investment Management and Franklin Templeton Investment Management Limited.

Investor Appeal: Stability and Tax Efficiency

The funds are likely to appeal to investors looking for steady, tax-exempt income at a time when municipal bond yields are still relatively high and state budgets are recovering after the pandemic. The lineup offers simple, cost-efficient access to municipal credit within state borders. Franklin Templeton’s move underscores growing demand for localized muni ETF exposure as more investors look to ETFs over traditional mutual funds for liquidity and transparency.

Read Next:

• Morgan Stanley Adds Eaton Vance ETF Targeting High-Income, Diversified Bond Opportunities

Photo: Piotr Swat via Shutterstock