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

Zacks Equity Research

If you're interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the Franklin LibertyQ U.S. Equity ETF (FLQL), a passively managed exchange traded fund launched on 04/26/2017.

The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $935.29 M, 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. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

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

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.25%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.62%.

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 20.90% of the portfolio. Consumer Discretionary and Consumer Staples round out the top three.

Looking at individual holdings, Intuit Inc (INTU) accounts for about 1.15% of total assets, followed by Nike Inc Cl B (NKE) and Mastercard Inc A (MA).

The top 10 holdings account for about 10.94% 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 roughly 12.14% so far this year and is up about 6.91% in the last one year (as of 03/15/2019). In the past 52-week period, it has traded between $26.18 and $31.54.

The ETF has a beta of 0.88 and standard deviation of 11.63% for the trailing three-year period. With about 249 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 reasonable 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 $165.69 B in assets, SPDR S&P 500 ETF has $258.05 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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
 
Intuit Inc. (INTU) : Free Stock Analysis Report
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
NIKE, Inc. (NKE) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
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