There was a change to the Franklin International Rotation Model this week.

For the third month in a row, there was enough change in relative strength in the Franklin International Rotation Model to warrant a trade. April was a turbulent month for most markets, impacted by announced U.S. tariffs. That turbulence extended to Hong Kong, seeing the Franklin FTSE Hong Kong ETF (FLHK) fall as much as 14.9% from the end of March before recovering enough to end April down only 1.3%. Despite its recovery, the fund saw enough deterioration to fall below the model’s sell threshold, allowing for a stronger area of the market to enter.  

Entering the model is the Franklin FTSE India ETF (FLIN), which is the highest-ranking fund not already held by the model. FLIN holds a strong 4.49 fund score, which is 1.52 points higher than the average Emerging Market Equity representative, in addition to being 0.7 points greater than the average India fund. The fund gained 3.9% in April while returning to a buy signal for the first time since September of last year. Looking farther back, FLIN has traded in a positive trend dating back to 2020 and has displayed long-term relative strength over the iShares MSCI ACWI ex US ETF (ACWX) since 2021.

The Franklin International Rotation Model will rebalance back to equal weight after the trade, with it now holding exposure to the following funds:

This section of the report categorizes select Franklin ETFs by their respective broad group. Along with each group, you can view the Average Group Score, which is an average of the scores of all funds represented in that particular group. Those Franklin ETFs that meet or exceed the Average Group Score will be highlighted in green in order to easily view those ETFs that have superior strength within their respective group. You want to focus on those ETFs that exhibit superior strength when looking to add new exposure to a particular group.

The distribution curve places each ETF on a bell curve according to their respective degrees of overbought or oversold status using a 10-week distribution. ETFs that are statistically oversold will appear on the left-hand side of the bell curve, while those that have become statistically overbought will appear on the right-hand side of the bell curve. Perhaps the most useful attribute of this feature is that it displays the entire universe on the curve at one time to give us a general picture of whether the Franklin ETF universe is generally overbought on a near-term basis, or generally oversold. Our best opportunities are to buy strong relative strength ETFs that have regressed back toward mean conditions based on market weakness, or have become oversold based upon extreme market weakness. Weekly Distribution is a short-term gauge that is most helpful in timing entry and exit points, while the longer-term information of trend and relative strength is a more controlling factor in the decision of whether to buy or sell.

Legend:

• UPPERCASE indicates that the RS chart is on a buy signal.
• lowercase indicates that the RS chart is in a sell signal.
• GREEN lettering indicates the ETFs trend chart is on a buy signal.
• RED lettering indicates the ETF is on a sell signal.
• Box Color indicates the Sector Status Rating. Green = Favored, Yellow = Average, and Red = Unfavored.

The Franklin LibertyShares International Model is designed to identify major country and regional themes in the international marketplace through the use of the Point & Figure relative strength tools. For more information on the portfolio construction and back testing, see the model info file on the models page.  (Note: The Franklin LibertyShares ETF Models will be updated Thursday mornings by 9:30 am EST) 

Weekly Changes: 

* - Dates prior to 09/01/2018, which is when the Franklin LibertyShares ETF Model became available on the NDW Research Platform, are representative of when the position was added to the backtested model.