Head of retail ETF distribution explains how his firm is offering more country-specific access to serve a more global investor
Each month at WP we offer a slate of articles and content pieces that go deep on a particular topic. This January, we’re exploring the use of index funds.
Global markets had their day in 2025. According to JP Morgan Asset Management, key global indices all managed to outperform the S&P 500 last year. That core US index, which returned 17.9 per cent in 2025, was beaten by the MSCI EM index (34.4%), MSCI Asia ex-Japan (33.0%), Japan TOPIX (25.5%), the UK FTSE All-Share (24.0%), and the MSCI Europe ex-UK index (20.1%). This is the first time in a decade that the S&P 500 underperformed all those indices and is only the third time in the past decade that the S&P 500 wasn’t among the top three of those equity indices for annual performance. That relative underperformance is motivating more investors who enjoyed healthy returns from the S&P to consider more global exposures.
Franklin Templeton is working to meet those investors needs. Ahmed Farooq, SVP and Head of Retail ETF Distribution at Franklin Templeton, explained that after a long period where equity opportunity was concentrated in the US, investors and advisors are now seeking global markets to drive alpha. As they do so, they’re seeking out index exposures for low-cost and efficient access. Rather than just seeking broad global market or emerging market indices, though, many of these advisors are looking to augment their exposures with single-country ETFs that can allow for more specific and directed investing.
“It's something that hasn't happened in many, many years. It's always been very US‑centric, and primarily because of just how well the US market has done. So before advisors would buy straight beta and then maybe diversify their US exposure by factors or sectors or market capitalization,” Farooq says. “Then, in part fuelled by what’s happened in the US, international and emerging markets came back. What's happened is that advisors who had very little to no exposure to those parts of the portfolio are now finding a real reason to invest.”
While performance has made the tracks that many Canadian advisors and investors find themselves following, Farooq notes that brand association and familiarity have helped drive retail interest. Where domestic and US brands once held a leading place in Canadian mental real estate, there’s a greater grasp of Chinese, Japanese, Korean, and European branding that helps global consumers become global investors.
While the US and some other countries have pushed back against the tide of globalization, Farooq notes that the response has been regionalism in certain parts of the world and a push towards more global trade by other countries, like Canada. That geopolitical realignment has also come with pushes towards more fiscal stimulus and more investor-friendly policies in certain countries, which has driven appreciation on equity markets.
Given the ease and efficiency that comes with index investing in general, Farooq explains that Franklin Templeton has pushed to offer global market index products at lower than legacy prices. Their international markets index tracking fund is offered at a 9 basis point management fee, while the fee on their emerging market equities fund is 15 basis points. Those strategies, Farooq says, can act as core allocations while a new suite of country-specific index funds offer additional building blocks.
While Franklin Templeton lists an array of country-specific ETFs on US exchanges, they currently offer two strategies on Canadian markets: Japan and India. Japan was the first country-specific strategy they launched, Farooq explains, because the onset of inflation and investor-friendly corporate and public policy had driven huge appreciation in Japanese equity markets. Rather than trying to actively manage that eccentricities of that country, Farooq explains that a broad index offered Canadian advisors much of what they sought.
More recently, Franklin launched a country-specific ETF tracking Indian equities. India, he explains, has a long-term demographic and economic growth story that many investors find compelling. While recent events around Russian oil imports and US tariffs have seen Indian markets wobble a little, Farooq argues that the long-term narrative for that country remains intact. When looking at opportunities in the world’s largest country by population, Farooq argues that a broad index can provide most of what Canadian investors need while maintaining the diversification necessary to manage emerging market risk.
For advisors who remain split on where to allocate now, between Canadian, US, and international markets, Farooq argues that the volume of index funds now available to help with global exposures can empower them to make more targeted decisions. He believes that a combination of macro and micro forces should be enough for advisors to consider more global diversification. Valuations in the US are far in excess of other global equities and global forces like Chinese AI innovation, Japanese growth, and European fiscal stimulus are all contributing to a more broad range of global opportunities.
“The hard choice for advisors is in how they want to make these investments,” says Farooq. “If you want to do it yourself you’ve got to trade on those markets, in those currencies, in those different time zones. Through an index strategy we can give that to you at a very low cost base with very broad exposure.”
