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

Zacks Equity Research

The Franklin LibertyQ U.S. Equity ETF (FLQL) was launched on 04/26/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $1.21 B, making it one of the larger ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

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 2.04%.

Sector Exposure and Top Holdings

ETFs offer a 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.

This ETF has heaviest allocation to the Information Technology sector--about 19.20% of the portfolio. Consumer Discretionary and Consumer Staples round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 1.16% of total assets, followed by Target Corp (TGT) and At+t Inc (T).

The top 10 holdings account for about 11.16% 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 return is roughly 20.99% so far this year and it's up approximately 7.51% in the last one year (as of 09/18/2019). In the past 52-week period, it has traded between $26.18 and $33.24.

The ETF has a beta of 0.87 and standard deviation of 11.82% for the trailing three-year period. With about 254 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 good 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 $187.60 B in assets, SPDR S&P 500 ETF has $276.04 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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Franklin LibertyQ U.S. Equity ETF (FLQL): ETF Research Reports
 
AT&T Inc. (T) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
Target Corporation (TGT) : Free Stock Analysis Report
 
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