ETF Evaluator: Franklin Short-Term Municipal Income ETF () Follow This ETF

Franklin Short-Term Municipal Income ETF Overview

Franklin Short-Term Municipal Income ETF (FTMS) is an actively managed Municipal Bond Muni National Short exchange-traded fund (ETF). Franklin Templeton Investments launched the ETF in 2018.

The investment seeks as high a level of current income exempt from federal income tax as the adviser believes is consistent with preservation of capital. The fund invests mainly in bonds that pay interest that is exempt from federal income tax and that have short-term maturities. The bonds the fund invests in are mainly investment-grade in quality. Under normal circumstances, the fund invests at least 80% of its net assets in tax-exempt investments, which for purposes of this policy include investments paying interest subject to the federal AMT for individuals.

About Franklin Short-Term Municipal Income ETF (FTMS)

There are 5 members of the management team with an average tenure of 3.38 years: Daniel Workman (2024), Garrett Hamilton (2016), Ben Barber (2024), Francisco Rivera (2024) and James Conn (2024). Management tenure is more important for actively managed ETFs than passive index ETFs.

The ETF has 2 primary benchmarks: Bloomberg Municipal TR USD index with a weighting of 100% and Bloomberg Municipal 3 Yr 2-4 TR USD index with a weighting of 100%. Franklin Short-Term Municipal Income ETF has 250 securities in its portfolio. The top 10 holdings constitute 16.5% of the ETF’s assets. The ETF meets the SEC requirement of being classified as a diversified fund. The ETF is not considered to have an ESG focus with its investment selection and management.

Franklin Short-Term Municipal Income ETF is part of the Fixed Income global asset class and is within the Municipal Bond ETF group. Franklin Short-Term Municipal Income ETF has 1.0% of its portfolio invested in foreign issues. The overall assets allocated to domestic stock is 0.0% There is 0.0% allocated to foreign stock, and 0.0% is allocated to preferred stocks. The bond allocation as a percentage of total assets is 86.6% (85.6% domestic bond, 1.0% foreign bond and 0.0% convertible bond). Franklin Short-Term Municipal Income ETF has 13.4% of the portfolio in cash.

Assets Under Management

The fund has $192 million in total assets, which is below the $1 billion average for the Muni National Short category. Normally, lower assets under management translates to higher average expense ratios, and greater total assets are desired. However, for some investment categories, such as small-cap investing, it may be difficult for the manager to fully employ the desired active strategy if assets grow too large or too quickly.

FTMS Performance and Fees

The expense ratio measures how much of a fund’s assets are used for administrative expenses and operating expenses, including adviser fees and fees for the transfer agent and custodial services. The Franklin Short-Term Municipal Income ETF expense ratio is below average compared to funds in the Muni National Short category. Franklin Short-Term Municipal Income ETF has an expense ratio of 0.21%, which is the same as its category average, making the fund expense ratio grade a C. While it is difficult to predict returns, it is known that high annual expense ratios reduce your rate of return, and excessive fees are difficult to overcome. Active management normally comes with higher expense ratios than passive index management. Certain investment categories such as small company and foreign also normally have higher expense ratios. It is best to compare fund expense ratios against the category averages for meaningful assessments.

High portfolio turnover can translate to higher expenses and lower aftertax returns. Franklin Short-Term Municipal Income ETF has a portfolio turnover rate of 37%, which indicates that it holds its assets around / 0.0 years. By way of comparison, the average portfolio turnover is 56% for the Muni National Short category.

Recently, in the month of July 2026, Franklin Short-Term Municipal Income ETF returned -0.3%, which earned it a grade of C, as the Muni National Short category had an average return of -0.2%. The letter grades of A, B, C, D and F are based upon relative rankings within the investment category. A grade of A, for example, would indicate that the return is in the highest 20% for that time period compared to all ETFs in that category.

Franklin Short-Term Municipal Income ETF has a trailing yield of 3.04%, which is above the 2.91% category average. The fund normally distributes its income monthly and its capital gains annually.

It’s natural to seek the best-performing investments, but you must consider the relationship between risk and return and the impact of costs and taxes on your realized returns.

Franklin Short-Term Municipal Income ETF Grades

Year to date, the ETF has returned 1.3%, 0.1 percentage points better than the category, which translates into a grade of B. The fund has returned 3.2% over the past year (grade of B), 3.7% over the past three years (grade of A) and 2.1% per year over the past five years (grade of B).

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