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Is Franklin U.S. Large Cap Multifactor Index ETF (FLQL) a Strong ETF Right Now?
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The Franklin U.S. Large Cap Multifactor Index ETF (FLQL - Free Report) made its debut on 04/26/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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. FLQL has been able to amass assets over $1.30 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the LibertyQ US Large Cap Equity Index.
The LibertyQ US Large Cap Equity Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell 1000 Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell 1000 Index that have favorable exposure to four investment style factors quality, value, momentum and low volatility.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.15%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 32.70% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 7.23% of total assets, followed by Apple Inc (AAPL - Free Report) and Nvidia Corp (NVDA - Free Report) .
The top 10 holdings account for about 35.15% of total assets under management.
Performance and Risk
The ETF return is roughly 16.45% and it's up approximately 22.53% so far this year and in the past one year (as of 07/30/2024), respectively. FLQL has traded between $41.57 and $57.66 during this last 52-week period.
The fund has a beta of 0.94 and standard deviation of 15.73% for the trailing three-year period. With about 215 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Large Cap Multifactor Index ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $495.91 billion in assets, SPDR S&P 500 ETF has $556.02 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 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. Large Cap Multifactor Index ETF (FLQL) a Strong ETF Right Now?
The Franklin U.S. Large Cap Multifactor Index ETF (FLQL - Free Report) made its debut on 04/26/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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. FLQL has been able to amass assets over $1.30 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the LibertyQ US Large Cap Equity Index.
The LibertyQ US Large Cap Equity Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell 1000 Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell 1000 Index that have favorable exposure to four investment style factors quality, value, momentum and low volatility.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.15%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 32.70% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 7.23% of total assets, followed by Apple Inc (AAPL - Free Report) and Nvidia Corp (NVDA - Free Report) .
The top 10 holdings account for about 35.15% of total assets under management.
Performance and Risk
The ETF return is roughly 16.45% and it's up approximately 22.53% so far this year and in the past one year (as of 07/30/2024), respectively. FLQL has traded between $41.57 and $57.66 during this last 52-week period.
The fund has a beta of 0.94 and standard deviation of 15.73% for the trailing three-year period. With about 215 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Large Cap Multifactor Index ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $495.91 billion in assets, SPDR S&P 500 ETF has $556.02 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 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.