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Is Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?
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The Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) was launched on 04/26/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Blend 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.
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.
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.
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
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $405.09 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, FLQM seeks to match the performance of the LibertyQ U.S. Mid Cap Equity Index.
The LibertyQ U.S. Mid Cap Equity Index includes U.S. mid-capitalization companies 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 0.30% for this ETF, which makes it on par with most peer products in the space.
FLQM's 12-month trailing dividend yield is 1.27%.
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 Industrials sector - about 22.50% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
When you look at individual holdings, Old Dominion Freight Line (ODFL - Free Report) accounts for about 1.27% of the fund's total assets, followed by Nucor Corp (NUE - Free Report) and Trane Technologies Plc (TT - Free Report) .
FLQM's top 10 holdings account for about 11.11% of its total assets under management.
Performance and Risk
Year-to-date, the Franklin U.S. Mid Cap Multifactor Index ETF has lost about -0.39% so far, and is up about 16.91% over the last 12 months (as of 01/03/2024). FLQM has traded between $40.75 and $48.36 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 17.32% for the trailing three-year period. With about 204 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Mid Cap Multifactor Index ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $58.59 billion in assets, iShares Core S&P Mid-Cap ETF has $76.31 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 - Mid 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. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?
The Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) was launched on 04/26/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Blend 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.
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.
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.
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
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $405.09 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, FLQM seeks to match the performance of the LibertyQ U.S. Mid Cap Equity Index.
The LibertyQ U.S. Mid Cap Equity Index includes U.S. mid-capitalization companies 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 0.30% for this ETF, which makes it on par with most peer products in the space.
FLQM's 12-month trailing dividend yield is 1.27%.
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 Industrials sector - about 22.50% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
When you look at individual holdings, Old Dominion Freight Line (ODFL - Free Report) accounts for about 1.27% of the fund's total assets, followed by Nucor Corp (NUE - Free Report) and Trane Technologies Plc (TT - Free Report) .
FLQM's top 10 holdings account for about 11.11% of its total assets under management.
Performance and Risk
Year-to-date, the Franklin U.S. Mid Cap Multifactor Index ETF has lost about -0.39% so far, and is up about 16.91% over the last 12 months (as of 01/03/2024). FLQM has traded between $40.75 and $48.36 in this past 52-week period.
The ETF has a beta of 1.02 and standard deviation of 17.32% for the trailing three-year period. With about 204 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Mid Cap Multifactor Index ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $58.59 billion in assets, iShares Core S&P Mid-Cap ETF has $76.31 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 - Mid 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.