If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD), a passively managed exchange traded fund launched on 12/28/2015.
The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $559.89 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.27%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.57%.
Sector Exposure and Top Holdings
ETFs offer a 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 to the Consumer Staples sector--about 24.80% of the portfolio. Utilities and Real Estate round out the top three.
Looking at individual holdings, Altria Group Inc (MO) accounts for about 2.56% of total assets, followed by Lockheed Martin Corp (LMT) and Verizon Communications Inc (VZ).
The top 10 holdings account for about 24.91% of total assets under management.
Performance and Risk
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.
The ETF return is roughly 3.16% so far this year and it's up approximately 13.33% in the last one year (as of 05/27/2025). In the past 52-week period, it has traded between $35.19 and $41.26.
The ETF has a beta of 0.68 and standard deviation of 13.78% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, LVHD is a good option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) track a similar index. While Schwab U.S. Dividend Equity ETF has $67.43 billion in assets, Vanguard Value ETF has $131.73 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.
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 U.S. Low Volatility High Dividend Index ETF (LVHD): ETF Research Reports Lockheed Martin Corporation (LMT): Free Stock Analysis Report Verizon Communications Inc. (VZ): Free Stock Analysis Report Altria Group, Inc. (MO): Free Stock Analysis Report Vanguard Value ETF (VTV): ETF Research Reports Schwab U.S. Dividend Equity ETF (SCHD): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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