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

Making its debut on 04/26/2017, smart beta exchange traded fund Franklin U.S. Large Cap Multifactor Index ETF (FLQL) provides investors broad exposure to the Style Box - Large Cap Blend 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.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

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

Managed by Franklin Templeton Investments, FLQL has amassed assets over $1.49 billion, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the LibertyQ US Large Cap Equity Index before fees and expenses.

The LibertyQ US Large Cap Equity Index seeks to achieve a lower level of risk and higher risk-adjusted performance than the Russell 1000 Index over the long term by applying a multi-factor selection process, which is designed to select equity securities from the Russell 1000 Index that have favorable exposure to four investment style factors quality, value, momentum and low volatility.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for FLQL are 0.15%, which makes it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.12%.

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.

For FLQL, it has heaviest allocation in the Information Technology sector --about 34% of the portfolio --while Consumer Discretionary and Healthcare round out the top three.

Taking into account individual holdings, Apple Inc (AAPL) accounts for about 6.71% of the fund's total assets, followed by Nvidia Corp (NVDA) and Microsoft Corp (MSFT).

FLQL's top 10 holdings account for about 33.89% of its total assets under management.

Performance and Risk

So far this year, FLQL has gained about 4.75%, and was up about 13.60% in the last one year (as of 06/12/2025). During this past 52-week period, the fund has traded between $50.10 and $62.24.

The ETF has a beta of 0.93 and standard deviation of 16.80% for the trailing three-year period. With about 214 holdings, it effectively diversifies company-specific risk.

Alternatives

Franklin U.S. Large Cap Multifactor Index ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. There are other ETFs in the space which investors could consider as well.

SPDR S&P 500 ETF (SPY) tracks S&P 500 Index and the Vanguard S&P 500 ETF (VOO) tracks S&P 500 Index. SPDR S&P 500 ETF has $610.71 billion in assets, Vanguard S&P 500 ETF has $668.83 billion. SPY has an expense ratio of 0.09% and VOO charges 0.03%.

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

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