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Is Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) debuted on 04/26/2017, and offers 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.
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.
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 $286.40 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining 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.
It's 12-month trailing dividend yield comes in at 1.33%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Information Technology round out the top three.
Taking into account 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) .
The top 10 holdings account for about 11.11% of total assets under management.
Performance and Risk
The ETF return is roughly 3.04% so far this year and is up about 6.92% in the last one year (as of 11/03/2023). In the past 52-week period, it has traded between $40.42 and $46.44.
FLQM has a beta of 1.02 and standard deviation of 17.27% 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 $51.06 billion in assets, iShares Core S&P Mid-Cap ETF has $67.75 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?
A smart beta exchange traded fund, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) debuted on 04/26/2017, and offers 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.
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.
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 $286.40 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining 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.
It's 12-month trailing dividend yield comes in at 1.33%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Industrials sector; Consumer Discretionary and Information Technology round out the top three.
Taking into account 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) .
The top 10 holdings account for about 11.11% of total assets under management.
Performance and Risk
The ETF return is roughly 3.04% so far this year and is up about 6.92% in the last one year (as of 11/03/2023). In the past 52-week period, it has traded between $40.42 and $46.44.
FLQM has a beta of 1.02 and standard deviation of 17.27% 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 $51.06 billion in assets, iShares Core S&P Mid-Cap ETF has $67.75 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.