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 Quick QuoteLVHD - Free Report) , a passively managed exchange traded fund launched on 12/28/2015.

The fund is sponsored by Franklin Templeton Investments. It has amassed assets over $594.62 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. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 3.72%.

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 Utilities sector--about 25.70% of the portfolio. Consumer Staples and Real Estate round out the top three.

Looking at individual holdings, Lockheed Martin Corp (LMT Quick QuoteLMT - Free Report) accounts for about 2.69% of total assets, followed by Coca-Cola Co/the (KO Quick QuoteKO - Free Report) and Mcdonald's Corp (MCD Quick QuoteMCD - Free Report) .

The top 10 holdings account for about 25.58% 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 has added about 13.67% so far this year and was up about 18.54% in the last one year (as of 09/20/2024). In the past 52-week period, it has traded between $32.68 and $40.66.

The ETF has a beta of 0.78 and standard deviation of 13.70% for the trailing three-year period. With about 119 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 Quick QuoteSCHD - Free Report) and the Vanguard Value ETF (VTV Quick QuoteVTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $61.20 billion in assets, Vanguard Value ETF has $127.40 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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.