Is Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) a Strong ETF Right Now?

Launched on 04/26/2017, the Franklin U.S. Mid Cap Multifactor Index ETF (FLQM) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Blend category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

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.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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

The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $1.78 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, FLQM seeks to match the performance of the LibertyQ U.S. Mid Cap Equity Index.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.30%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.47%.

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 in the Industrials sector - about 20.9% of the portfolio. Consumer Discretionary and Financials round out the top three.

Taking into account individual holdings, Tapestry Inc (TPR) accounts for about 1.2% of the fund's total assets, followed by Ulta Beauty Inc (ULTA) and Dollar General Corp (DG).

FLQM's top 10 holdings account for about 11.33% of its total assets under management.

Performance and Risk

The ETF has added about 1.46% so far this year and it's up approximately 3.43% in the last one year (as of 01/30/2026). In the past 52-week period, it has traded between $46.92 and $58.50

The fund has a beta of 0.98 and standard deviation of 14.71% for the trailing three-year period. With about 207 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 $93.75 billion in assets, iShares Core S&P Mid-Cap ETF has $107.83 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

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

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