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Is Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?

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A smart beta exchange traded fund, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD - Free Report) debuted on 12/28/2015, and offers broad exposure to the Style Box - Large Cap Value 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.

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.

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

Managed by Franklin Templeton Investments, LVHD has amassed assets over $652.14 million, making 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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.27%.

LVHD's 12-month trailing dividend yield is 3.83%.

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.

This ETF has heaviest allocation in the Consumer Staples sector - about 21.60% of the portfolio. Utilities and Real Estate round out the top three.

When you look at individual holdings, Verizon Communications In (VZ - Free Report) accounts for about 2.93% of the fund's total assets, followed by Us Bancorp (USB - Free Report) and Southern Co/the (SO - Free Report) .

The top 10 holdings account for about 26.14% of total assets under management.

Performance and Risk

The ETF has lost about -0.53% and is up roughly 3.60% so far this year and in the past one year (as of 03/26/2024), respectively. LVHD has traded between $32.68 and $38.50 during this last 52-week period.

LVHD has a beta of 0.77 and standard deviation of 13.56% for the trailing three-year period. With about 128 holdings, it effectively diversifies company-specific risk.


Franklin U.S. Low Volatility High Dividend Index ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

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 $55.28 billion in assets, Vanguard Value ETF has $113.91 billion. IWD has an expense ratio of 0.19% 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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