Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way. 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. Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the Franklin U.S. Low Volatility High Dividen ...

Core Viewpoint - The Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) is designed to provide broad exposure to the Large Cap Value segment of the US equity market, with a focus on stable income through investments in profitable U.S. companies with high dividend yields and lower volatility [1][7]. Group 1: Fund Overview - LVHD is a passively managed ETF launched on December 28, 2015, and is sponsored by Franklin Templeton Investments [1]. - The fund has accumulated assets exceeding $579.65 million, positioning it as an average-sized ETF in its category [1]. - The ETF has an annual operating expense ratio of 0.27%, which is competitive within its peer group [4]. Group 2: Investment Characteristics - Large cap companies, typically with market capitalizations above $10 billion, are considered stable investments with lower risk and more reliable cash flows compared to mid and small cap companies [2]. - Value stocks, characterized by lower price-to-earnings and price-to-book ratios, have historically outperformed growth stocks in most markets, although growth stocks tend to perform better in strong bull markets [3]. Group 3: Sector Exposure and Holdings - The ETF has a significant allocation to the Consumer Staples sector, comprising approximately 24.40% of the portfolio, followed by Utilities and Real Estate [5]. - Cisco Systems Inc (CSCO) is the largest individual holding at about 2.65% of total assets, with Chevron Corp (CVX) and Medtronic Plc (MDT) also among the top holdings [6]. - The top 10 holdings collectively account for around 25.11% of total assets under management [6]. Group 4: Performance Metrics - LVHD aims to match the performance of the QS Low Volatility High Dividend Index, which focuses on stable income through investments in high dividend yield stocks with lower volatility [7]. - The ETF has recorded a gain of approximately 7.90% year-to-date and an increase of about 12.48% over the past year as of July 28, 2025 [7]. - Over the past 52 weeks, LVHD has traded within a range of $37.37 to $41.26 [7]. Group 5: Risk and Diversification - The ETF has a beta of 0.66 and a standard deviation of 13.37% over the trailing three-year period, indicating lower volatility compared to the broader market [8]. - With around 122 holdings, LVHD effectively diversifies company-specific risk [8]. Group 6: Alternatives and Market Position - LVHD carries a Zacks ETF Rank of 3 (Hold), indicating a stable position based on expected asset class return, expense ratio, and momentum [9]. - Other comparable ETFs include the Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV), which have significantly larger asset bases of $71.33 billion and $141.62 billion, respectively [10].