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Is Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?
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Launched on 12/28/2015, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
The fund is managed by Franklin Templeton Investments, and has been able to amass over $1.02 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. LVHD seeks to match the performance of the QS Low Volatility High Dividend Index before fees and expenses.
The QS Low Volatility High Dividend Index provides stable income through investment in stocks of profitable U.S. companies with relatively high dividend yields, lower price and earnings volatility.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.27% for LVHD, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.66%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For LVHD, it has heaviest allocation in the Utilities sector --about 22.20% of the portfolio --while Consumer Staples and Financials round out the top three.
When you look at individual holdings, Cisco Systems Inc (CSCO - Free Report) accounts for about 2.67% of the fund's total assets, followed by Pfizer Inc (PFE - Free Report) and Johnson & Johnson (JNJ - Free Report) .
LVHD's top 10 holdings account for about 24.89% of its total assets under management.
Performance and Risk
The ETF has lost about -4.67% so far this year and is down about -0.77% in the last one year (as of 09/18/2023). In the past 52-week period, it has traded between $33.74 and $39.17.
The ETF has a beta of 0.77 and standard deviation of 14.08% for the trailing three-year period. With about 127 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $50.59 billion in assets, Vanguard Value ETF has $101.56 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 - Large Cap Value.
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. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?
Launched on 12/28/2015, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
The fund is managed by Franklin Templeton Investments, and has been able to amass over $1.02 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. LVHD seeks to match the performance of the QS Low Volatility High Dividend Index before fees and expenses.
The QS Low Volatility High Dividend Index provides stable income through investment in stocks of profitable U.S. companies with relatively high dividend yields, lower price and earnings volatility.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.27% for LVHD, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.66%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For LVHD, it has heaviest allocation in the Utilities sector --about 22.20% of the portfolio --while Consumer Staples and Financials round out the top three.
When you look at individual holdings, Cisco Systems Inc (CSCO - Free Report) accounts for about 2.67% of the fund's total assets, followed by Pfizer Inc (PFE - Free Report) and Johnson & Johnson (JNJ - Free Report) .
LVHD's top 10 holdings account for about 24.89% of its total assets under management.
Performance and Risk
The ETF has lost about -4.67% so far this year and is down about -0.77% in the last one year (as of 09/18/2023). In the past 52-week period, it has traded between $33.74 and $39.17.
The ETF has a beta of 0.77 and standard deviation of 14.08% for the trailing three-year period. With about 127 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $50.59 billion in assets, Vanguard Value ETF has $101.56 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 - Large Cap Value.
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.