Franklin U.S. Low Volatility High Dividend ETF LVHD attempts to strike a delicate balance between offering an attractive yield while also maintaining below-average risk. Its portfolio of stable dividend-payers should offer solid downside protection while delivering competitive payouts. 
The fund tracks the QS Low Volatility High Dividend Index. The index screens for stocks with attractive yet durable yields, excluding those with insufficient earnings to support their dividends. To further narrow the opportunity set, the index assigns each remaining eligible stock a stable yield score which favors those exhibiting low historical price and earnings volatility. An optimizer constructs the final portfolio that seeks to maximize yield and minimize risk. It imposes individual holding and sector weight limits as well as liquidity constraints. These constraints mitigate the portfolio's firm-specific risk and capacity concerns, given it does reach into small-cap territory.
The strategy consistently delivers a higher trailing 12-month yield than the Russell 1000 Value Index, but it can lag some dividend-focused strategic-beta peers because of its strict inclusion criteria. The rigorous dividend-screening process and incorporation of a stable yield score effectively control for risk in this historically volatile market segment.
The fund falls into the large-value Morningstar Category, but its sector composition diverges substantially from the category index owing to its dividend focus. The fund is overweight utilities and consumer defensive stocks at the expense of financial services and healthcare. The index does not impose any turnover constraints, which can cause turnover to run high at each quarterly rebalance. Historically, turnover has ranged from 30% to 50%, depending on market conditions. Turnover costs can detract from returns.
Past performance has been mixed relative to the Russell 1000 Value Index despite achieving a consistently higher 12-month yield. Since its late 2015 inception, the fund underperformed the benchmark by about half a percentage point annualized. Its risk-conscious approach helped the fund achieve a consistently lower standard deviation of returns and carve a slight risk-adjusted advantage despite outright underperformance.

Analyst Rating

Risk-controlled dividend strategy.

Associate Analyst

Zachary Evens

Cisco Systems

Johnson & Johnson

Verizon

Philip Morris

Kraft Heinz

Southern Company

PepsiCo

Cummins

Lockheed Martin

Coca-Cola

Franklin U.S. Low Volatility High Dividend ETF screens for companies with durable high dividends. Its holdings tend to exhibit low price and earnings volatility. It earns an Above Average Process rating.

Above Average

Process

The fund is managed by Franklin Advisers, which replaced QS Investors as the subadvisor on this strategy in 2022. While the team has endured organizational and personnel changes in recent years, it retains deep quantitative experience and solid infrastructure support. It retains an Average People Pillar rating.
Vaneet Chadha, Christopher Floyd, Jacqueline Kenney, and Jose Maldonado are the named managers on this fund. Previously, Russell Shtern and Michael Labella played leading roles in the management and operation of the fund. Shtern and Labella left Franklin in June 2022, and July 2023, respectively. Jacqueline Kenney was added to the roster in July 2023 to fill Labella’s void. Kenney comes to the fund with over a decade of quantitative fund management experience with Franklin and QS Investors.
Franklin Templeton integrated QS Investors into its multi-asset unit as part of its Legg Mason acquisition. The reorganization has not impacted index-tracking ability as the team maintained most personnel and expanded its resources. The managers can draw support from its large front and back-office technology team and research team to manage daily portfolio activities. They also have a team of junior managers and traders to assist in executing trades. The team focuses on minimizing tracking error and ensuring tax efficiency, especially given the fund's income mandate. There are independent committees periodically reviewing the fund's risk and tracking error.

Average

People

Franklin Templeton Investments, the asset-management arm of publicly traded but family managed Franklin Resources BEN, has been busy with acquisitions. The struggle in streamlining these disparate capabilities underpins its Average Parent rating. 
Franklin’s July 2020 acquisition of multiboutique manager Legg Mason remains its largest as of March 2023, but the firm has continued to grow through acquisitions. Its April 2022 and November 2022 purchases of Lexington Partners and Alcentra, respectively, make it one of world’s largest managers of alternative investments (with alts comprising USD 231 billion of its USD 1.4 trillion assets under management as of December 2022), while its July 2022 acquisition of O’Shaughnessy Asset Management adds a novel direct-indexing capability to its managed account offerings. These purchases, however, do little to alleviate the operational complexity of a firm with dozens of investment teams split by asset class, region, and investment platform.   
Although there are several standout strategies at the firm, many teams have struggled with personnel turnover, succession challenges, and unappealing performance patterns. Shepherding these geographically disparate capabilities, which have varying levels of centralization of distribution and risk management, shall be quite the challenge for the firm to manage.

Parent

Legg Mason Low Volatility High Dividend ETF

LVHD tracks an index of roughly 50-100 US stocks selected from across the market cap spectrum. Stocks are selected and weighted to emphasize profitability, high dividends, low price volatility and low earnings volatility.

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Broad-based dividend strategies haven't performed very well in 2023. But panelists at VettaFi's Equity Symposium argued that there is value in dividend ETFs — investors just need to know where to look.

There's Value in Dividend ETFs. Investors Just Need to Know Where to Look

Franklin U.S. Core Dividend Tilt Index ETF

Even though most people expect the Federal Reserve to leave interest rates unchanged this week, there remains much uncertainty for the rest of the year. Fed watchers will be looking for signals about whether rates will remain steady into 2024 or if one or two hikes might occur.

Should You Turn to Dividend ETFs Given Fed Uncertainty?

Launched on 12/28/2015, the Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.

Is Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) a Strong ETF Right Now?

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), a passively managed exchange traded fund launched on 12/28/2015.

Should Franklin U.S. Low Volatility High Dividend Index ETF (LVHD) Be on Your Investing Radar?

LVHD fishes for high-yielding, low-volatility stocks from the Russell 3000. We appreciate LVHD's policy of not just relying on backward-looking metrics. LVHD has done a better job than SPHD in not just delivering returns but juggling risk as well.

LVHD: The ETF Is Worth Pursuing, But For Now, A Hold

LVHD selects profitable U.S. securities expected to pay relatively high and sustainable dividends. Companies are further screened based on the attractiveness of their price and earnings volatility. The result is high concentration in defensive sectors like Utilities and Consumer Staples. LVHD's 0.72 five-year beta will likely appeal to risk-averse investors.

LVHD's Big Price: Yield And Volatility Triumph, Growth And Profits Stumble

Invesco S&P 500 High Dividend Low Volatility ETF

The Invesco S&P 500 High Dividend Low Volatility ETF invests based on the S&P 500 Low Volatility High Dividend Index. The Franklin U.S. Low Volatility High Dividend Index ETF invests based on the QS Low Volatility High Dividend Index.

SPHD Vs. LVHD: Rival ETF Outperforming The Better Known ETF

With earnings set to be a big indicator as to whether the U.S. economy has entered a recession or not in the coming weeks, investors may be looking to prepare for an economic contraction.

As Recession Looms, Low Volatility Income Can Perform

Low volatility strategies have been on the radar at VettaFi recently, especially following last month's bank crisis. The bank crisis may still be with us, too, if you ask Jamie Dimon.

This Low-Vol ETF Is Signaling a Buy Amid Market Volatility

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WisdomTree U.S. Total Dividend Fund

WisdomTree International High Dividend Fund

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iShares Core High Dividend ETF

Voya Asia Pacific High Dividend Equity Income Fund

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Invesco KBW High Dividend Yield Financial ETF

FlexShares Quality Dividend Defensive Index Fund

Investing in dividend-paying stocks has proved to be a helpful strategy, outperforming global markets over the long term. Dividend income strategies play an important role for multi-asset income portfolios. But they can also run the risk of being too narrowly focused, which can limit both income potential and upside participation when equity markets rise.

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Stocks paying higher dividends showed their mettle during a challenging 2022: the S&P 500 High Dividend Index declined only a modest –1.1% even as the S&P 500 tumbled –18.1%. In our view, much of the volatility in high-dividend strategies, broadly speaking, comes down to portfolio design choices, which can create very different characteristics.

Taming Biases In High-Dividend Equity Strategies

Franklin Templeton is preparing a new multi-asset income ETF, the Franklin Income Focus ETF (INCM), filed for a summer debut to U.S.-based investors and designed to maximize income.

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While rising rate concerns are prevalent in the market, investors may find these ETF options as intriguing picks for March.

5 ETFs to Pick for March

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Franklin Templeton is continuing its quest to bring its breadth of asset management prowess to bear in the ETF space, with a new milestone coming for its Franklin U.S. Low Volatility High Dividend Index ETF (LVHD).

Franklin Templeton's LVHD Is the Latest $1 Billion ETF

Franklin U.S. Low Volatility High Dividend Index ETF has a 3% yield and a strategy to limit risks. Almost 45% of its asset value is in utilities and consumer staples.

LVHD: Proof Of Concept In A Turbulent Market

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Vanguard Ultra Short-Term Bond ETF

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Expert recommendations for choosing among the myriad of Vanguard ETFs may prove to be a valuable resource to investors, even if not all of them will prove right. I present such recommendations made by highly knowledgeable sources, along with my own recommendations and the reasons for them.

Vanguard ETFs: Recommendations For 2023

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Investors have a ton on their plate this year, from inflation to rising rates to the prospect of a recession in the second half of the year.

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If 2022 wasn't part of a global pandemic, markets might look back on it as a peak of volatility for the last decade, perhaps since the Great Recession.

Go International to Diversify Your Dividends in ETF LVHI

On the lookout for dividends? You wouldn't be the only one; investors are hungry for dividends and other current income opportunities to boost their equities portfolios, especially with so much uncertainty looming over markets entering 2023.

Dividend ETF LVHD Triggers Key Technical Buy Signal

LVHD selects 50-100 low-volatile U.S. stocks that also pay high dividends. Its expense ratio is 0.27%, and LVHD manages $933 million in net assets. Unlike the more popular SPHD, LVHD prioritizes the low-volatility factor. As a result, it's the least-volatile dividend ETF on the market, and I expect it to yield 3.50%.

LVHD: Low Volatility Plus A 3.50% Dividend Yield, Should You Buy?

It goes without saying that 2022 has been a tumultuous year in the markets, with geopolitical, inflationary, supply chain, and rising rate factors making for quite a volatile year in the United States and abroad.

Seek Low-Vol Dividends in ETF Duo LVHD, LVHI

Investors often focus on growth versus value competition, but there are investment factors to consider. That sentiment is on full display this year as the low volatility and dividend factors are among the few that are producing decent results for investors.

Loving LVHD as a Better Low Vol Bet

Perhaps surprisingly when considering interest rates are rising – usually a negative for high-yield assets – high-dividend stocks and the related exchange traded funds are delivering for investors this year. Broadly speaking, these ETFs are outperforming the S&P 500.

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Low-volatility stocks are outperforming the broader market this year. Same goes for high-dividend equities.

News for Legg Mason Low Volatility High Dividend ETF ETF (LVHD)