The Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) made its debut on 12/28/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $579.29 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Value. LVHD is managed by Franklin Templeton Investments. 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.
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 0.27% for LVHD, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.29%.
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.
Representing 24.2% of the portfolio, the fund has heaviest allocation to the Utilities sector; Consumer Staples and Real Estate round out the top three.
Looking at individual holdings, Cisco Systems Inc (CSCO) accounts for about 2.95% of total assets, followed by Chevron Corp (CVX) and Medtronic Plc (MDT).
Its top 10 holdings account for approximately 26.48% of LVHD's total assets under management.
Performance and Risk
The ETF has added about 8.03% so far this year and is up roughly 9.08% in the last one year (as of 12/19/2025). In the past 52-week period, it has traded between $37.37 and $41.55
The ETF has a beta of 0.65 and standard deviation of 12.11% for the trailing three-year period. With about 121 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 $71.53 billion in assets, Vanguard Value ETF has $156.18 billion. SCHD has an expense ratio of 0.06% and VTV changes 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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Franklin U.S. Low Volatility High Dividend Index ETF (LVHD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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