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Is Franklin U.S. Equity Index ETF (USPX) a Strong ETF Right Now?
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Making its debut on 06/01/2016, smart beta exchange traded fund Franklin U.S. Equity Index ETF (USPX - Free Report) provides investors broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $838.48 million, making it one of the larger ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the MORNINGSTAR US TARGET MARKET EXPOSURE ID.
The Morningstar US Target Market Exposure Index targets large and mid-capitalization U.S. stocks representing the top 85% of the U.S. equity market by float-adjusted market capitalization.
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 0.03% for USPX, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.44%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 28.30% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.05% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon.com Inc (AMZN - Free Report) .
Its top 10 holdings account for approximately 29.52% of USPX's total assets under management.
Performance and Risk
Year-to-date, the Franklin U.S. Equity Index ETF has gained about 14.23% so far, and was up about 18.10% over the last 12 months (as of 10/19/2023). USPX has traded between $31.87 and $40.02 in this past 52-week period.
USPX has a beta of 0.86 and standard deviation of 18.69% for the trailing three-year period. With about 609 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Equity Index ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $43.82 billion in assets, Vanguard Total Stock Market ETF has $305.18 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
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 - All 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. Equity Index ETF (USPX) a Strong ETF Right Now?
Making its debut on 06/01/2016, smart beta exchange traded fund Franklin U.S. Equity Index ETF (USPX - Free Report) provides investors broad exposure to the Style Box - All Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $838.48 million, making it one of the larger ETFs in the Style Box - All Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the MORNINGSTAR US TARGET MARKET EXPOSURE ID.
The Morningstar US Target Market Exposure Index targets large and mid-capitalization U.S. stocks representing the top 85% of the U.S. equity market by float-adjusted market capitalization.
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 0.03% for USPX, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.44%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 28.30% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Healthcare and Financials round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.05% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon.com Inc (AMZN - Free Report) .
Its top 10 holdings account for approximately 29.52% of USPX's total assets under management.
Performance and Risk
Year-to-date, the Franklin U.S. Equity Index ETF has gained about 14.23% so far, and was up about 18.10% over the last 12 months (as of 10/19/2023). USPX has traded between $31.87 and $40.02 in this past 52-week period.
USPX has a beta of 0.86 and standard deviation of 18.69% for the trailing three-year period. With about 609 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Equity Index ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
IShares Core S&P Total U.S. Stock Market ETF (ITOT - Free Report) tracks S&P Total Market Index and the Vanguard Total Stock Market ETF (VTI - Free Report) tracks CRSP US Total Market Index. IShares Core S&P Total U.S. Stock Market ETF has $43.82 billion in assets, Vanguard Total Stock Market ETF has $305.18 billion. ITOT has an expense ratio of 0.03% and VTI charges 0.03%.
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 - All 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.