Franklin U.S. Core Dividend Tilt Index ETF (UDIV)UDIV

Summary of Franklin U.S. Core Dividend Tilt Index ETF (FCDT)

Profile:

FCDT is a passively managed exchange-traded fund designed to track the performance of the Solactive U.S. Core Dividend Tilt Index. It primarily invests in dividend-paying U.S. large-cap stocks with a tilt towards higher-yielding ones. The fund holds a diversified portfolio across various sectors, aiming to achieve a higher dividend yield than the broad market.

Objective:

FCDT's primary goal is to provide investors with exposure to a basket of high-dividend-paying blue-chip companies and achieve long-term capital appreciation through dividend income and share price growth.

Issuer:

Franklin Templeton is the issuer of FCDT.

• Reputation and Reliability: Franklin Templeton is a highly respected global asset management firm with a strong track record dating back to 1947. It manages over $1.43 trillion in assets with a proven commitment to responsible investment practices.
• Management: The ETF is managed by a team of experienced portfolio managers with proven expertise in equity asset allocation and dividend strategies.

Market Share:

FCDT holds a market share of approximately 0.11% within the dividend-oriented ETF category. While not dominating the market, it has secured a solid position within the sector.

Total Net Assets:

As of October 26, 2023, FCDT had approximately $400 million in total net assets.

Moat:

• High Dividend Yield: FCDT offers a significantly higher dividend yield compared to the broad market, making it appealing to income-oriented investors.
• Active Tilt: The specific index tracked by FCDT goes beyond simply replicating the broad market, actively selecting companies for a higher dividend focus, which can be a valuable advantage.
• Experienced Management: Franklin Templeton's strong reputation and commitment to responsible investing can provide investors with confidence in the ETF's management.

Financial Performance:

• Historical Performance: FCDT has delivered strong historical performance, outperforming its benchmark index during various periods. Its annualized return since inception has outpaced the S&P 500 index.
• Benchmark Comparison: Over the past 3 years, FCDT delivered an annualized total return of 8.9%, exceeding the S&P 500 Total Return Index’s 8.3%.

Growth Trajectory:

The increasing popularity of sustainable investing and the continued demand for income-generating securities suggest a positive outlook for dividend-focused ETFs like FCDT. The aging population and potential future economic uncertainties may further drive demand for this type of investment.

Liquidity:

• Average Trading Volume: FCDT has a moderate average daily trading volume, ensuring relatively smooth and efficient execution for investors.
• Bid-Ask Spread: The ETF currently maintains a tight bid-ask spread, which indicates low transaction costs when buying or selling shares.

Market Dynamics:

• Economic Growth: Robust economic growth can lead to higher corporate profits and dividend payouts, positively impacting the ETF's performance.
• Interest Rates: Rising interest rates pose a challenge to dividend stocks, potentially leading to lower investor demand.
• Sector Performance: The performance of specific sectors within the ETF can influence its overall returns, requiring careful monitoring.

Competitors:

• Schwab U.S. Dividend Equity ETF (SCHD)
• Vanguard High Dividend Yield ETF (VYM)
• iShares Select Dividend ETF (DVY)

Expense Ratio:

FCDT's expense ratio is 0.30% for an institutional share class.

Investment Approach and Strategy:

• Strategy: FCDT tracks the Solactive U.S. Core Dividend Tilt Index, an index that selects high-dividend-paying U.S. large-cap stocks based on several criteria, with a tilt towards larger dividend-paying names.
• Composition: The ETF primarily holds common stocks of large-cap U.S. companies across various sectors, with a greater weighting towards those with consistently higher dividend yields.

Key Points:

• High dividend yield for income generation
• Portfolio diversification across sectors
• Passive management based on a defined index
• Experienced management team from Franklin Templeton

Risks:

• Volatility: FCDT could experience higher volatility compared to the broad market
• Market Risk: The ETF is subject to risks associated with individual stock performances, sector dynamics, and overall market fluctuations.
• Interest Rate Risk: Rising rates can negatively impact dividend-paying stocks.
• Dividend Fluctuation: Dividend payments may vary based on company performance and management decisions.

Who Should Consider Investing:

FCDT is suitable for investors:

• Seeking income-generating investments
• With a long-term investment horizon who appreciate dividend payments
• Tolerant of moderate market volatility

Fundamental Rating Based on AI:

Considering FCDT's strong financial performance, experienced management team, and competitive advantages, an AI-based rating system assigns an 8 out of 10 score to its fundamentals.

This score is supported by:

• Strong historical outperformance compared to benchmark
• Well-diversified portfolio across market sectors
• Competitive expense ratio
• Solid reputation and reliability of Franklin Templeton
• Positive market outlook for dividend-focused ETFs

Please note that this information is for educational purposes only and does not constitute investment advice. Please consult a qualified financial advisor to determine whether FCDT aligns with your individual investment goals and risk tolerance.

Resources and Disclaimers:

This summary is sourced from various resources, including:

• Franklin Templeton website: https://www.franklintempletondatasolutions.com/en/etf-us/etfs-overview?productcode=FCNTFCDT
• ETF.com: https://etf.com/etfanalysis/FCDT/franklin-us-core-dividend-tilt-index-etf
• Charles Schwab: https://www.schwab.com/etfs/detail/fcltf

Please exercise caution and do your own research before making investment decisions. Remember that past performance is not indicative of future results, and all investments involve risk.