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Should Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) Be on Your Investing Radar?
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Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) is a passively managed exchange traded fund launched on 12/28/2015.
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $597.40 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.27%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.94%.
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.
This ETF has heaviest allocation to the Utilities sector--about 25% of the portfolio. Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.74% of total assets, followed by Southern Co/the (SO - Free Report) and Coca-Cola Co/the (KO - Free Report) .
The top 10 holdings account for about 25.77% of total assets under management.
Performance and Risk
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.
The ETF has gained about 5.73% so far this year and is up roughly 6.18% in the last one year (as of 07/18/2024). In the past 52-week period, it has traded between $32.68 and $38.50.
The ETF has a beta of 0.77 and standard deviation of 13.71% for the trailing three-year period. With about 119 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, LVHD is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $58.61 billion in assets, Vanguard Value ETF has $121.04 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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Should Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) Be on Your Investing Radar?
Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) is a passively managed exchange traded fund launched on 12/28/2015.
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $597.40 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.27%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.94%.
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.
This ETF has heaviest allocation to the Utilities sector--about 25% of the portfolio. Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 2.74% of total assets, followed by Southern Co/the (SO - Free Report) and Coca-Cola Co/the (KO - Free Report) .
The top 10 holdings account for about 25.77% of total assets under management.
Performance and Risk
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.
The ETF has gained about 5.73% so far this year and is up roughly 6.18% in the last one year (as of 07/18/2024). In the past 52-week period, it has traded between $32.68 and $38.50.
The ETF has a beta of 0.77 and standard deviation of 13.71% for the trailing three-year period. With about 119 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, LVHD is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $58.61 billion in assets, Vanguard Value ETF has $121.04 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.