Designed to provide broad exposure to the Style Box - Mid Cap Blend category of the market, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) is a smart beta exchange traded fund launched on 04/26/2017.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Franklin Templeton Investments. FLQM has been able to amass assets over $1.72 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund seeks to match the performance of the LibertyQ U.S. Mid Cap Equity Index before fees and expenses.
The LibertyQ U.S. Mid Cap Equity Index includes U.S. mid-capitalization companies that have favorable exposure to four investment style factors - quality, value, momentum and low volatility.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.30% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.35%.
Sector Exposure and Top Holdings
ETFs offer 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 in the Industrials sector - about 19.9% of the portfolio. Consumer Discretionary and Financials round out the top three.
Taking into account individual holdings, Delta Air Lines Inc (DAL) accounts for about 1.21% of the fund's total assets, followed by United Airlines Holdings (UAL) and Cummins Inc (CMI).
The top 10 holdings account for about 11.77% of total assets under management.
Performance and Risk
Year-to-date, the Franklin U.S. Mid Cap Multifactor Index ETF has added about 4.87% so far, and it's up approximately 4.64% over the last 12 months (as of 09/23/2025). FLQM has traded between $46.92 $58.81 in this past 52-week period.
The ETF has a beta of 0.98 and standard deviation of 16.01% for the trailing three-year period. With about 208 holdings, it effectively diversifies company-specific risk .
Alternatives
Franklin U.S. Mid Cap Multifactor Index ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $88.42 billion in assets, iShares Core S&P Mid-Cap ETF has $100.86 billion. VO has an expense ratio of 0.04% and IJH changes 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend
Bottom Line
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. Mid Cap Multifactor Index ETF (FLQM): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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