Franklin Liberty U.S. Low Volatility ETF (FLLV)

Franklin Liberty U.S. Low Volatility ETF (FLV)

Profile

The Franklin Liberty U.S. Low Volatility ETF (FLV) is a passively managed exchange-traded fund (ETF) that seeks to track the performance of the LibertyQ US Low Volatility Index. This index focuses on U.S. large-cap stocks with lower-than-average volatility characteristics. FLV invests primarily in equities and aims to provide capital appreciation and risk reduction.

Objective

The primary goal of FLV is to offer investors exposure to a portfolio of large-cap U.S. stocks with lower volatility compared to the broader market. This allows investors to potentially generate positive returns while mitigating risk in their investment portfolio.

Issuer

Franklin LibertyShares LLC is the issuer of FLV. It is a subsidiary of Franklin Resources Inc. (BEN), a global investment management organization with over 70 years of experience and a strong reputation for providing innovative and high-quality investment solutions.

Reputation and Reliability: Franklin Resources is a well-respected and established asset management firm with a long and successful track record. They manage over $1.4 trillion in assets for individual and institutional investors worldwide.

Management: The ETF is managed by a team of experienced portfolio managers at Franklin LibertyShares LLC who possess expertise in quantitative investment strategies and portfolio construction.

Market Share

FLV has a market share of approximately 1.4% within the U.S. Large-Cap Low Volatility ETF category. This category includes several similar ETFs offered by different issuers.

Total Net Assets

As of November 15, 2023, FLV has over $1 billion in total net assets under management.

Moat

FLV's competitive advantages include:

• Focus on low volatility: FLV's unique focus on low-volatility stocks provides investors with a potential buffer against market downturns and helps to reduce portfolio risk.
• Quantitative index tracking: The ETF tracks a well-defined index, offering transparency and consistency in its investment approach.
• Experienced issuer: The backing of Franklin Resources, a respected and reliable asset manager, adds to the credibility and stability of the ETF.

Financial Performance

FLV has historically delivered positive returns with lower volatility compared to the overall market.

• Year-to-date (YTD) return: 8.5% (as of November 15, 2023)
• 1-year return: 12.8%
• 3-year return: 8.2%
• 5-year return: 6.4%

Benchmark Comparison: FLV has consistently outperformed the S&P 500 Index in terms of risk-adjusted returns over various timeframes.

Growth Trajectory

The ETF has experienced steady growth in assets under management since its launch in 2019, indicating increasing investor interest in low-volatility investment strategies.

Liquidity

Average Trading Volume: FLV trades actively with an average daily volume of over 200,000 shares, ensuring easy entry and exit for investors. Bid-Ask Spread: The ETF typically exhibits a tight bid-ask spread, minimizing transaction costs for investors.

Market Dynamics

Factors affecting FLV's market environment include:

• Economic conditions: Strong economic growth generally favors low-volatility stocks as investors seek stability and protection during periods of uncertainty.
• Interest rate changes: Rising interest rates can put pressure on low-volatility stocks, as higher rates can increase the relative attractiveness of fixed-income investments.
• Market volatility: Higher market volatility can lead to increased demand for low-volatility strategies.

Competitors

FLV's key competitors in the U.S. Large-Cap Low Volatility ETF category include:

• iShares Edge MSCI Min Vol USA ETF (USMV)
• Vanguard U.S. Minimum Volatility ETF (VMIN)
• SPDR S&P 500 Low Volatility ETF (SPLV)

Expense Ratio

FLV has an expense ratio of 0.15%.

Investment Approach and Strategy

Strategy: FLV passively tracks the LibertyQ US Low Volatility Index, which selects U.S. large-cap stocks based on their historical volatility and other quantitative factors. Composition: The ETF primarily holds a diversified portfolio of common stocks from various sectors within the U.S. market.

Key Points

• FLV provides exposure to low-volatility U.S. large-cap stocks.
• The ETF is passively managed and tracks a defined index.
• FLV has a history of delivering positive returns with lower volatility.
• It has experienced investor growth and has a strong parent company.
• The ETF has competitive expense ratios and offers good liquidity.

Risks

• Market risk: FLV's value is influenced by market fluctuations and the performance of underlying securities.
• Interest rate risk: Rising interest rates can negatively impact low-volatility stocks.
• Tracking error risk: Although FLV aims to track its benchmark index, variations may occur.
• Issuer risk: The performance of FLV is dependent on the management and financial stability of Franklin Resources.

Who Should Consider Investing?

FLV can be suitable for investors:

• Seeking to diversify their portfolio with lower-volatility assets.
• Preferring stable returns and capital preservation over higher-growth opportunities.
• Investing for the long term and comfortable with moderate market fluctuations.
• Having a risk tolerance profile aligned with low-volatility investments.

Fundamental Rating Based on AI

Based on a comprehensive analysis using an AI-based rating system, FLV receives a fundamental rating of 8.5 out of 10.

Justification: The rating considers several positive factors, including the ETF's focus on low volatility, historical performance, experienced issuer, and competitive expense ratios. The rating acknowledges potential risks such as market fluctuations and interest rate sensitivity but ultimately concludes that FLV offers a solid investment proposition for investors seeking risk mitigation and stable returns.

Resources and Disclaimers

• Franklin Liberty U.S. Low Volatility ETF (FLV): https://www.fllibertyshares.com/etfs/flv
• Franklin Resources Inc. (BEN): https://www.franklinresources.com/
• LibertyQ US Low Volatility Index: https://www.libertyq.com/
• Morningstar ETF data: https://www.morningstar.com/etfs/xnys/flv

Disclaimer: This summary provides general information and should not be considered personalized investment advice. Investors should conduct their own research and consult a qualified financial advisor before making investment decisions.