Is Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?

Launched on 12/28/2015, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.

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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

Because the fund has amassed over $495.53 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. LVHD is managed by Franklin Templeton Investments. This particular fund, before fees and expenses, seeks to match the performance of the QS Low Volatility High Dividend Index.

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.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.27%.

It has a 12-month trailing dividend yield of 4.15%.

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.

LVHD's heaviest allocation is in the Consumer Staples sector, which is about 25.90% of the portfolio. Its Utilities and Real Estate round out the top three.

Taking into account individual holdings, Intl Business Machines Corp (IBM) accounts for about 2.93% of the fund's total assets, followed by Altria Group Inc (MO) and Philip Morris International (PM).

The top 10 holdings account for about 27.16% of total assets under management.

Performance and Risk

The ETF has lost about -2.41% and is up about 7.13% so far this year and in the past one year (as of 04/09/2025), respectively. LVHD has traded between $34.89 and $41.26 during this last 52-week period.

The ETF has a beta of 0.68 and standard deviation of 13.87% for the trailing three-year period. With about 114 holdings, it effectively diversifies company-specific risk.

Alternatives

Franklin U.S. Low Volatility High Dividend Index ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Schwab U.S. Dividend Equity ETF (SCHD) tracks Dow Jones U.S. Dividend 100 Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. Schwab U.S. Dividend Equity ETF has $61.38 billion in assets, Vanguard Value ETF has $118.26 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

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 - Large Cap Value.

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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This article originally published on Zacks Investment Research (zacks.com).

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