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Is Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?
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Making its debut on 04/26/2017, smart beta exchange traded fund Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) provides investors broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
FLQM is managed by Franklin Templeton Investments, and this fund has amassed over $260.56 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the LibertyQ U.S. Mid Cap Equity Index.
The LibertyQ U.S. Mid Cap Equity Index includes U.S. mid-capitalization companies that have favorable exposure to four investment style factors - quality, value, momentum and low volatility.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.30% for FLQM, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.31%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
FLQM's heaviest allocation is in the Industrials sector, which is about 22.50% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Cadence Design Sys Inc (CDNS - Free Report) accounts for about 1.40% of total assets, followed by Fortinet Inc (FTNT - Free Report) and Synopsys Inc (SNPS - Free Report) .
The top 10 holdings account for about 10.94% of total assets under management.
Performance and Risk
The ETF has gained about 7.79% and is up roughly 7.15% so far this year and in the past one year (as of 08/29/2023), respectively. FLQM has traded between $37.44 and $46.44 during this last 52-week period.
The ETF has a beta of 1.01 and standard deviation of 17.61% for the trailing three-year period. With about 205 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Mid Cap Multifactor Index ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $53.77 billion in assets, iShares Core S&P Mid-Cap ETF has $73.37 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?
Making its debut on 04/26/2017, smart beta exchange traded fund Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) provides investors broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
FLQM is managed by Franklin Templeton Investments, and this fund has amassed over $260.56 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the LibertyQ U.S. Mid Cap Equity Index.
The LibertyQ U.S. Mid Cap Equity Index includes U.S. mid-capitalization companies that have favorable exposure to four investment style factors - quality, value, momentum and low volatility.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.30% for FLQM, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.31%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
FLQM's heaviest allocation is in the Industrials sector, which is about 22.50% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Cadence Design Sys Inc (CDNS - Free Report) accounts for about 1.40% of total assets, followed by Fortinet Inc (FTNT - Free Report) and Synopsys Inc (SNPS - Free Report) .
The top 10 holdings account for about 10.94% of total assets under management.
Performance and Risk
The ETF has gained about 7.79% and is up roughly 7.15% so far this year and in the past one year (as of 08/29/2023), respectively. FLQM has traded between $37.44 and $46.44 during this last 52-week period.
The ETF has a beta of 1.01 and standard deviation of 17.61% for the trailing three-year period. With about 205 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Mid Cap Multifactor Index ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $53.77 billion in assets, iShares Core S&P Mid-Cap ETF has $73.37 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.