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Is Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?
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Launched on 04/26/2017, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
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
FLQM is managed by Franklin Templeton Investments, and this fund has amassed over $201.84 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, this particular fund 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
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 0.30% for FLQM, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.28%.
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.
This ETF has heaviest allocation in the Industrials sector - about 21.70% of the portfolio. Information Technology and Consumer Discretionary round out the top three.
Taking into account individual holdings, Cadence Design Sys Inc (CDNS - Free Report) accounts for about 1.20% of the fund's total assets, followed by Ww Grainger Inc (GWW - Free Report) and Fortinet Inc (FTNT - Free Report) .
The top 10 holdings account for about 11.4% of total assets under management.
Performance and Risk
So far this year, FLQM has gained about 7%, and is up roughly 20.06% in the last one year (as of 06/19/2023). During this past 52-week period, the fund has traded between $37.44 and $45.55.
The fund has a beta of 1 and standard deviation of 17.76% for the trailing three-year period. With about 205 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Mid Cap Multifactor Index ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $53.28 billion in assets, iShares Core S&P Mid-Cap ETF has $68.14 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?
Launched on 04/26/2017, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
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
FLQM is managed by Franklin Templeton Investments, and this fund has amassed over $201.84 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, this particular fund 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
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 0.30% for FLQM, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.28%.
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.
This ETF has heaviest allocation in the Industrials sector - about 21.70% of the portfolio. Information Technology and Consumer Discretionary round out the top three.
Taking into account individual holdings, Cadence Design Sys Inc (CDNS - Free Report) accounts for about 1.20% of the fund's total assets, followed by Ww Grainger Inc (GWW - Free Report) and Fortinet Inc (FTNT - Free Report) .
The top 10 holdings account for about 11.4% of total assets under management.
Performance and Risk
So far this year, FLQM has gained about 7%, and is up roughly 20.06% in the last one year (as of 06/19/2023). During this past 52-week period, the fund has traded between $37.44 and $45.55.
The fund has a beta of 1 and standard deviation of 17.76% for the trailing three-year period. With about 205 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Mid Cap Multifactor Index ETF is an excellent option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.
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 $53.28 billion in assets, iShares Core S&P Mid-Cap ETF has $68.14 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.