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Is Franklin LibertyQ U.S. Equity ETF (FLQL) a Strong ETF Right Now?
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The Franklin LibertyQ U.S. Equity ETF (FLQL - Free Report) made its debut on 04/26/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.
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.
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.
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.
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 $1.28 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Blend. FLQL is managed by Franklin Templeton Investments. FLQL, before fees and expenses, seeks to match the performance of the LibertyQ US Large Cap Equity Index.
The U.S. Large Cap Underlying 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for FLQL are 0.15%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.91%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FLQL's heaviest allocation is in the Information Technology sector, which is about 23.60% of the portfolio. Its Healthcare and Industrials round out the top three.
Taking into account individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 1.20% of the fund's total assets, followed by Adobe Inc (ADBE - Free Report) and Eli Lilly + Co (LLY - Free Report) .
The top 10 holdings account for about 10.92% of total assets under management.
Performance and Risk
The ETF has added about 20.39% so far this year and is up roughly 28.33% in the last one year (as of 08/27/2021). In the past 52-week period, it has traded between $33.51 and $44.94.
The fund has a beta of 0.90 and standard deviation of 21.43% for the trailing three-year period. With about 258 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin LibertyQ U.S. Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $301.22 billion in assets, SPDR S&P 500 ETF has $392.91 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?
The Franklin LibertyQ U.S. Equity ETF (FLQL - Free Report) made its debut on 04/26/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.
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.
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.
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.
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 $1.28 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Blend. FLQL is managed by Franklin Templeton Investments. FLQL, before fees and expenses, seeks to match the performance of the LibertyQ US Large Cap Equity Index.
The U.S. Large Cap Underlying 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for FLQL are 0.15%, which makes it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.91%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
FLQL's heaviest allocation is in the Information Technology sector, which is about 23.60% of the portfolio. Its Healthcare and Industrials round out the top three.
Taking into account individual holdings, Nvidia Corp (NVDA - Free Report) accounts for about 1.20% of the fund's total assets, followed by Adobe Inc (ADBE - Free Report) and Eli Lilly + Co (LLY - Free Report) .
The top 10 holdings account for about 10.92% of total assets under management.
Performance and Risk
The ETF has added about 20.39% so far this year and is up roughly 28.33% in the last one year (as of 08/27/2021). In the past 52-week period, it has traded between $33.51 and $44.94.
The fund has a beta of 0.90 and standard deviation of 21.43% for the trailing three-year period. With about 258 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin LibertyQ U.S. Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
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 $301.22 billion in assets, SPDR S&P 500 ETF has $392.91 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.