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Is Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?
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Launched on 12/28/2015, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
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
LVHD is managed by Franklin Templeton Investments, and this fund has amassed over $1.08 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, LVHD seeks to match the performance of the QS Low Volatility High Dividend Index.
The QS Low Volatility High Dividend Index provides stable income through investment in stocks of profitable U.S. companies with relatively high dividend yields, lower price and earnings volatility.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.27% for LVHD, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.32%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector - about 25.50% of the portfolio. Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Philip Morris Internation (PM - Free Report) accounts for about 2.88% of total assets, followed by Cummins Inc (CMI - Free Report) and General Mills Inc (GIS - Free Report) .
LVHD's top 10 holdings account for about 26.13% of its total assets under management.
Performance and Risk
Year-to-date, the Franklin U.S. Low Volatility High Dividend Index ETF has lost about -0.71% so far, and is up roughly 3.02% over the last 12 months (as of 07/14/2023). LVHD has traded between $33.74 and $40.23 in this past 52-week period.
The fund has a beta of 0.76 and standard deviation of 14.30% for the trailing three-year period. With about 98 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $51.66 billion in assets, Vanguard Value ETF has $100.34 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
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 Value.
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. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?
Launched on 12/28/2015, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as 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.
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
LVHD is managed by Franklin Templeton Investments, and this fund has amassed over $1.08 billion, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, LVHD seeks to match the performance of the QS Low Volatility High Dividend Index.
The QS Low Volatility High Dividend Index provides stable income through investment in stocks of profitable U.S. companies with relatively high dividend yields, lower price and earnings volatility.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.27% for LVHD, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.32%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector - about 25.50% of the portfolio. Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Philip Morris Internation (PM - Free Report) accounts for about 2.88% of total assets, followed by Cummins Inc (CMI - Free Report) and General Mills Inc (GIS - Free Report) .
LVHD's top 10 holdings account for about 26.13% of its total assets under management.
Performance and Risk
Year-to-date, the Franklin U.S. Low Volatility High Dividend Index ETF has lost about -0.71% so far, and is up roughly 3.02% over the last 12 months (as of 07/14/2023). LVHD has traded between $33.74 and $40.23 in this past 52-week period.
The fund has a beta of 0.76 and standard deviation of 14.30% for the trailing three-year period. With about 98 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Low Volatility High Dividend Index ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $51.66 billion in assets, Vanguard Value ETF has $100.34 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
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 Value.
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.