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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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Franklin Templeton Investments, FLQL has amassed assets over $1.10 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the LibertyQ US Large Cap Equity Index before fees and expenses.
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
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 0.15% for FLQL, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.71%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For FLQL, it has heaviest allocation in the Information Technology sector --about 34.70% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.72% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Nvidia Corp (NVDA - Free Report) .
FLQL's top 10 holdings account for about 30.39% of its total assets under management.
Performance and Risk
The ETF has added roughly 18.32% so far this year and was up about 12.97% in the last one year (as of 11/23/2023). In the past 52-week period, it has traded between $38.77 and $45.94.
The ETF has a beta of 0.92 and standard deviation of 15.84% for the trailing three-year period. With about 213 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Large Cap Multifactor Index 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 $374.52 billion in assets, SPDR S&P 500 ETF has $428.79 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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Franklin Templeton Investments, FLQL has amassed assets over $1.10 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the LibertyQ US Large Cap Equity Index before fees and expenses.
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
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 0.15% for FLQL, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.71%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For FLQL, it has heaviest allocation in the Information Technology sector --about 34.70% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.
Looking at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 7.72% of total assets, followed by Microsoft Corp (MSFT - Free Report) and Nvidia Corp (NVDA - Free Report) .
FLQL's top 10 holdings account for about 30.39% of its total assets under management.
Performance and Risk
The ETF has added roughly 18.32% so far this year and was up about 12.97% in the last one year (as of 11/23/2023). In the past 52-week period, it has traded between $38.77 and $45.94.
The ETF has a beta of 0.92 and standard deviation of 15.84% for the trailing three-year period. With about 213 holdings, it effectively diversifies company-specific risk.
Alternatives
Franklin U.S. Large Cap Multifactor Index 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 $374.52 billion in assets, SPDR S&P 500 ETF has $428.79 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.