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Is Franklin LibertyQ U.S. Equity ETF (FLQL) a Strong ETF Right Now?
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Launched on 04/26/2017, the Franklin LibertyQ U.S. Equity ETF (FLQL - Free Report) is a smart beta exchange traded fund offering 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.
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.
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.
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.
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
The fund is managed by Franklin Templeton Investments. FLQL has been able to amass assets over $948.02 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FLQL 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.15% for FLQL, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.97%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FLQL, it has heaviest allocation in the Information Technology sector --about 25.60% of the portfolio --while Healthcare and Industrials round out the top three.
When you look at individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 1.29% of the fund's total assets, followed by Adobe Inc (ADBE - Free Report) and Thermo Fisher Scientific Inc (TMO - Free Report) .
The top 10 holdings account for about 10.81% of total assets under management.
Performance and Risk
The ETF has lost about -7.69% and is up roughly 12.88% so far this year and in the past one year (as of 02/15/2022), respectively. FLQL has traded between $37.22 and $47.20 during this last 52-week period.
The ETF has a beta of 0.92 and standard deviation of 21.12% for the trailing three-year period. With about 257 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin LibertyQ U.S. Equity ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $320.14 billion in assets, SPDR S&P 500 ETF has $398.31 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 LibertyQ U.S. Equity ETF (FLQL) a Strong ETF Right Now?
Launched on 04/26/2017, the Franklin LibertyQ U.S. Equity ETF (FLQL - Free Report) is a smart beta exchange traded fund offering 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.
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.
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.
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.
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
The fund is managed by Franklin Templeton Investments. FLQL has been able to amass assets over $948.02 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. Before fees and expenses, FLQL 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.15% for FLQL, making it one of the least expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.97%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For FLQL, it has heaviest allocation in the Information Technology sector --about 25.60% of the portfolio --while Healthcare and Industrials round out the top three.
When you look at individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 1.29% of the fund's total assets, followed by Adobe Inc (ADBE - Free Report) and Thermo Fisher Scientific Inc (TMO - Free Report) .
The top 10 holdings account for about 10.81% of total assets under management.
Performance and Risk
The ETF has lost about -7.69% and is up roughly 12.88% so far this year and in the past one year (as of 02/15/2022), respectively. FLQL has traded between $37.22 and $47.20 during this last 52-week period.
The ETF has a beta of 0.92 and standard deviation of 21.12% for the trailing three-year period. With about 257 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin LibertyQ U.S. Equity ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $320.14 billion in assets, SPDR S&P 500 ETF has $398.31 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.