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Is Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) debuted on 12/28/2015, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
LVHD is managed by Franklin Templeton Investments, and this fund has amassed over $570.35 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, 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
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 cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.27%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.64%.
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.
This ETF has heaviest allocation in the Utilities sector - about 24.70% of the portfolio. Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Cisco Systems Inc (CSCO - Free Report) accounts for about 2.85% of total assets, followed by Mcdonald's Corp (MCD - Free Report) and Us Bancorp (USB - Free Report) .
The top 10 holdings account for about 25.6% of total assets under management.
Performance and Risk
The ETF has gained about 16.01% so far this year and was up about 19.24% in the last one year (as of 12/03/2024). In the past 52-week period, it has traded between $34.51 and $41.26.
The ETF has a beta of 0.78 and standard deviation of 13.62% for the trailing three-year period. With about 118 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $67.51 billion in assets, Vanguard Value ETF has $133.57 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?
A smart beta exchange traded fund, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) debuted on 12/28/2015, and offers broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
LVHD is managed by Franklin Templeton Investments, and this fund has amassed over $570.35 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. This particular fund, before fees and expenses, 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
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 cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.27%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.64%.
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.
This ETF has heaviest allocation in the Utilities sector - about 24.70% of the portfolio. Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Cisco Systems Inc (CSCO - Free Report) accounts for about 2.85% of total assets, followed by Mcdonald's Corp (MCD - Free Report) and Us Bancorp (USB - Free Report) .
The top 10 holdings account for about 25.6% of total assets under management.
Performance and Risk
The ETF has gained about 16.01% so far this year and was up about 19.24% in the last one year (as of 12/03/2024). In the past 52-week period, it has traded between $34.51 and $41.26.
The ETF has a beta of 0.78 and standard deviation of 13.62% for the trailing three-year period. With about 118 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $67.51 billion in assets, Vanguard Value ETF has $133.57 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.