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Is Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?
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The Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) was launched on 12/28/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $605.24 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. LVHD is managed by Franklin Templeton Investments. Before fees and expenses, this particular fund seeks to match the performance of the QS Low Volatility High Dividend Index.
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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.27%.
The fund has a 12-month trailing dividend yield of 3.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 25.40% of the portfolio, the fund has heaviest allocation to the Utilities sector; 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
Year-to-date, the Franklin U.S. Low Volatility High Dividend Index ETF return is roughly 7.65% so far, and it's up approximately 4.79% over the last 12 months (as of 07/31/2024). LVHD has traded between $32.68 and $38.60 in this past 52-week period.
LVHD has a beta of 0.77 and standard deviation of 13.72% 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 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $58.74 billion in assets, Vanguard Value ETF has $120.71 billion. SCHD has an expense ratio of 0.06% 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?
The Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) was launched on 12/28/2015, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $605.24 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. LVHD is managed by Franklin Templeton Investments. Before fees and expenses, this particular fund seeks to match the performance of the QS Low Volatility High Dividend Index.
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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.27%.
The fund has a 12-month trailing dividend yield of 3.87%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 25.40% of the portfolio, the fund has heaviest allocation to the Utilities sector; 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
Year-to-date, the Franklin U.S. Low Volatility High Dividend Index ETF return is roughly 7.65% so far, and it's up approximately 4.79% over the last 12 months (as of 07/31/2024). LVHD has traded between $32.68 and $38.60 in this past 52-week period.
LVHD has a beta of 0.77 and standard deviation of 13.72% 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 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.
Schwab U.S. Dividend Equity ETF (SCHD - Free Report) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $58.74 billion in assets, Vanguard Value ETF has $120.71 billion. SCHD has an expense ratio of 0.06% 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.