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Is Franklin LibertyQ U.S. Equity ETF (FLQL) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the Franklin LibertyQ U.S. Equity ETF (FLQL - Free Report) is a smart beta exchange traded fund launched on 04/26/2017.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Managed by Franklin Templeton Investments, FLQL has amassed assets over $941.01 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. FLQL seeks to match the performance of the LibertyQ US Large Cap Equity Index before fees and expenses.
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.
Operating expenses on an annual basis are 0.15% for FLQL, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.92%.
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 20.50% of the portfolio. Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Abbvie Inc (ABBV - Free Report) accounts for about 1.40% of total assets, followed by Lockheed Martin Corp (LMT - Free Report) and Bristol Myers Squibb Co (BMY - Free Report) .
FLQL's top 10 holdings account for about 12.36% of its total assets under management.
Performance and Risk
The ETF has lost about -6.06% and was up about 6.89% so far this year and in the past one year (as of 04/19/2022), respectively. FLQL has traded between $40.94 and $47.20 during this last 52-week period.
FLQL has a beta of 0.92 and standard deviation of 21.43% 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 $318.72 billion in assets, SPDR S&P 500 ETF has $398.02 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 LibertyQ U.S. Equity ETF (FLQL) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the Franklin LibertyQ U.S. Equity ETF (FLQL - Free Report) is a smart beta exchange traded fund launched on 04/26/2017.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Managed by Franklin Templeton Investments, FLQL has amassed assets over $941.01 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. FLQL seeks to match the performance of the LibertyQ US Large Cap Equity Index before fees and expenses.
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.
Operating expenses on an annual basis are 0.15% for FLQL, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.92%.
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 20.50% of the portfolio. Healthcare and Consumer Staples round out the top three.
Looking at individual holdings, Abbvie Inc (ABBV - Free Report) accounts for about 1.40% of total assets, followed by Lockheed Martin Corp (LMT - Free Report) and Bristol Myers Squibb Co (BMY - Free Report) .
FLQL's top 10 holdings account for about 12.36% of its total assets under management.
Performance and Risk
The ETF has lost about -6.06% and was up about 6.89% so far this year and in the past one year (as of 04/19/2022), respectively. FLQL has traded between $40.94 and $47.20 during this last 52-week period.
FLQL has a beta of 0.92 and standard deviation of 21.43% 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 $318.72 billion in assets, SPDR S&P 500 ETF has $398.02 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.