Should Franklin LibertyQ U.S. Equity ETF (FLQL) Be on Your Investing Radar?
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 $1.27 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
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 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
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 0.15%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 23.80% of the portfolio. Consumer Discretionary and Consumer Staples round out the top three.
Looking at individual holdings, Apple Inc (AAPL) accounts for about 1.37% of total assets, followed by Nvidia Corp (NVDA) and United Parcel Service Cl B (UPS).
The top 10 holdings account for about 11.83% 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 gained about 3.23% so far this year and it's up approximately 9.66% in the last one year (as of 10/26/2020). In the past 52-week period, it has traded between $23.79 and $36.44.
The ETF has a beta of 0.90 and standard deviation of 21.28% for the trailing three-year period. With about 253 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 SP 500 ETF (IVV) and the SPDR SP 500 ETF (SPY) track a similar index. While iShares Core SP 500 ETF has $221.99 billion in assets, SPDR SP 500 ETF has $302.72 billion. IVV has an expense ratio of 0.03% 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
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
SPDR SP 500 ETF (SPY): ETF Research Reports
iShares Core SP 500 ETF (IVV): ETF Research Reports
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