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Is Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Mid Cap Blend category of the market, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) is a smart beta exchange traded fund launched on 04/26/2017.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $1.15 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. FLQM, 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
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 0.30%.
The fund has a 12-month trailing dividend yield of 1.23%.
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.
FLQM's heaviest allocation is in the Industrials sector, which is about 24.40% of the portfolio. Its Consumer Discretionary and Information Technology round out the top three.
Taking into account individual holdings, Fair Isaac Corp (FICO - Free Report) accounts for about 1.39% of the fund's total assets, followed by Dr Horton Inc (DHI - Free Report) and Pultegroup Inc (PHM - Free Report) .
The top 10 holdings account for about 11.3% of total assets under management.
Performance and Risk
So far this year, FLQM return is roughly 20.42%, and is up about 35.61% in the last one year (as of 11/13/2024). During this past 52-week period, the fund has traded between $43.94 and $57.97.
The ETF has a beta of 1.02 and standard deviation of 17.22% for the trailing three-year period. With about 207 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 $74.20 billion in assets, iShares Core S&P Mid-Cap ETF has $97.61 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?
Designed to provide broad exposure to the Style Box - Mid Cap Blend category of the market, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM - Free Report) is a smart beta exchange traded fund launched on 04/26/2017.
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $1.15 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. FLQM, 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
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 0.30%.
The fund has a 12-month trailing dividend yield of 1.23%.
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.
FLQM's heaviest allocation is in the Industrials sector, which is about 24.40% of the portfolio. Its Consumer Discretionary and Information Technology round out the top three.
Taking into account individual holdings, Fair Isaac Corp (FICO - Free Report) accounts for about 1.39% of the fund's total assets, followed by Dr Horton Inc (DHI - Free Report) and Pultegroup Inc (PHM - Free Report) .
The top 10 holdings account for about 11.3% of total assets under management.
Performance and Risk
So far this year, FLQM return is roughly 20.42%, and is up about 35.61% in the last one year (as of 11/13/2024). During this past 52-week period, the fund has traded between $43.94 and $57.97.
The ETF has a beta of 1.02 and standard deviation of 17.22% for the trailing three-year period. With about 207 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 $74.20 billion in assets, iShares Core S&P Mid-Cap ETF has $97.61 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.