Full access to Entrepreneur for $5
Subscribe

Is Franklin LibertyQ U.S. Equity ETF (FLQL) a Strong ETF Right Now?

Smart Beta ETF report for FLQL

By
This story originally appeared on Zacks

The Franklin LibertyQ U.S. Equity ETF (FLQL) made its debut on 04/26/2017, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.

- Zacks

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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $1.28 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Blend. FLQL is managed by Franklin Templeton Investments. FLQL, before fees and expenses, seeks to match the performance of the LibertyQ US Large Cap Equity Index.

The U.S. Large Cap Underlying 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for FLQL are 0.15%, which makes it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.91%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

FLQL's heaviest allocation is in the Information Technology sector, which is about 23.60% of the portfolio. Its Healthcare and Industrials round out the top three.

Taking into account individual holdings, Nvidia Corp (NVDA) accounts for about 1.20% of the fund's total assets, followed by Adobe Inc (ADBE) and Eli Lilly + Co (LLY).

The top 10 holdings account for about 10.92% of total assets under management.

Performance and Risk

The ETF has added about 20.39% so far this year and is up roughly 28.33% in the last one year (as of 08/27/2021). In the past 52-week period, it has traded between $33.51 and $44.94.

The fund has a beta of 0.90 and standard deviation of 21.43% for the trailing three-year period. With about 258 holdings, it effectively diversifies company-specific risk.

Alternatives

Franklin LibertyQ U.S. Equity 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) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $301.22 billion in assets, SPDR S&P 500 ETF has $392.91 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.



5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Franklin LibertyQ U.S. Equity ETF (FLQL): ETF Research Reports

 

Eli Lilly and Company (LLY): Free Stock Analysis Report

 

NVIDIA Corporation (NVDA): Free Stock Analysis Report

 

Adobe Inc. (ADBE): Free Stock Analysis Report

 

SPDR S&P 500 ETF (SPY): ETF Research Reports

 

iShares Core S&P 500 ETF (IVV): ETF Research Reports

 

To read this article on Zacks.com click here.