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Is Franklin U.S. Large Cap Multifactor Index ETF (FLQL) a Strong ETF Right Now?
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Launched on 04/26/2017, the Franklin U.S. Large Cap Multifactor Index 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
The fund is managed by Franklin Templeton Investments, and has been able to amass over $927.72 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, 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
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 cheaper products in the space.
The fund has a 12-month trailing dividend yield of 2.13%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 28.90% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.55% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
FLQL's top 10 holdings account for about 23.75% of its total assets under management.
Performance and Risk
So far this year, FLQL has lost about -14.95%, and is down about -9.58% in the last one year (as of 10/25/2022). During this past 52-week period, the fund has traded between $36.61 and $47.20.
FLQL has a beta of 0.91 and standard deviation of 23.15% for the trailing three-year period. With about 218 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Large Cap Multifactor Index 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 $286.46 billion in assets, SPDR S&P 500 ETF has $353.55 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 U.S. Large Cap Multifactor Index ETF (FLQL) a Strong ETF Right Now?
Launched on 04/26/2017, the Franklin U.S. Large Cap Multifactor Index 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of 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
The fund is managed by Franklin Templeton Investments, and has been able to amass over $927.72 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, 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
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 cheaper products in the space.
The fund has a 12-month trailing dividend yield of 2.13%.
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.
This ETF has heaviest allocation in the Information Technology sector - about 28.90% of the portfolio. Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 6.55% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
FLQL's top 10 holdings account for about 23.75% of its total assets under management.
Performance and Risk
So far this year, FLQL has lost about -14.95%, and is down about -9.58% in the last one year (as of 10/25/2022). During this past 52-week period, the fund has traded between $36.61 and $47.20.
FLQL has a beta of 0.91 and standard deviation of 23.15% for the trailing three-year period. With about 218 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Large Cap Multifactor Index 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 $286.46 billion in assets, SPDR S&P 500 ETF has $353.55 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.