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The Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) was launched on 12/28/2015, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $568.88 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category 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.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
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 0.27%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.77%.
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 Consumer Staples sector--about 25.90% of the portfolio. Utilities and Industrials round out the top three.
Looking at individual holdings, Lockheed Martin Corp (LMT) accounts for about 3.02% of total assets, followed by Johnson & Johnson (JNJ) and Cvs Health Corp (CVS).
The top 10 holdings account for about 26.01% of total assets under management.
Performance and Risk
LVHD seeks to match the performance of the QS Low Volatility High Dividend Index before fees and expenses. The QS Low Volatility High Dividend Index provides stable income through investment in stocks of profitable U.S. companies with relatively high dividend yields, lower price and earnings volatility.
The ETF has lost about -3.91% so far this year and it's up approximately 6.25% in the last one year (as of 07/20/2022). In the past 52-week period, it has traded between $35.76 and $41.12.
The ETF has a beta of 0.75 and standard deviation of 22.11% for the trailing three-year period. With about 92 holdings, it effectively diversifies company-specific risk.
Franklin U.S. Low Volatility High Dividend Index 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, LVHD is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $51.79 billion in assets, Vanguard Value ETF has $95.19 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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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Franklin U.S. Low Volatility High Dividend Index ETF (LVHD): ETF Research Reports
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
CVS Health Corporation (CVS) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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