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Should Franklin LibertyQ U.S. Equity ETF (FLQL) Be on Your Investing Radar?

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·4 min read
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Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Franklin LibertyQ U.S. Equity ETF (FLQL) is a passively managed exchange traded fund launched on 04/26/2017.

The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $1.41 billion, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.86%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 25.40% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Eli Lilly + Co (LLY) accounts for about 1.37% of total assets, followed by Applied Materials Inc (AMAT) and Intel Corp (INTC).

The top 10 holdings account for about 11.47% of total assets under management.

Performance and Risk

FLQL seeks to match the performance of the LibertyQ US Large Cap Equity Index before fees and expenses. 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.

The ETF has added about 12.41% so far this year and is up roughly 46.56% in the last one year (as of 04/22/2021). In the past 52-week period, it has traded between $29.56 and $41.84.

The ETF has a beta of 0.91 and standard deviation of 21.41% for the trailing three-year period. With about 257 holdings, it effectively diversifies company-specific risk.

Alternatives

Franklin LibertyQ U.S. Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, FLQL is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $275.54 billion in assets, SPDR S&P 500 ETF has $364.64 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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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FL-LBTY US EQ (FLQL): ETF Research Reports
 
Intel Corporation (INTC) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
Applied Materials, Inc. (AMAT) : Free Stock Analysis Report
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
ISHARS-SP500 (IVV): ETF Research Reports
 
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Zacks Investment Research