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

Verizon

Keurig Dr Pepper Inc

Southern Company

U.S. Bancorp

Kraft Heinz

Coca-Cola

Realty Income Corp

Johnson & Johnson

Philip Morris

PepsiCo

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.

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.

Be Selective With High Dividend ETFs

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

Looking at LVHD's 2022 Leadership

Broadly speaking, dividend stocks and the related exchange traded funds are among the most durable shelter-from-the-storm plays. The Franklin U.S. Low Volatility High Dividend Index ETF (NASDAQ: LVHD) is one of the standouts of the group.

There's Still Gas in the Dividend Tank

LVHD is dominated by the utilities and staples sector. Economic and market conditions look troubling.

LVHD ETF: This Lifebuoy May Help Your Portfolio

iShares Core S&P Total U.S. Stock Market ETF

iShares Core S&P 500 ETF

FlexShares Quality Dividend Index Fund

Schwab US Dividend Equity ETF

SPDR S&P 500 ETF Trust

Vanguard S&P 500 ETF

Vanguard Total Stock Market ETF

Find your wealth by investing in a diversified portfolio consistently over time.

Ready to Get Rich With Stocks? You Can't Go Wrong With These 3 Investments

Some exchange traded funds are versatile across a variety of market settings, but some of these funds can and do truly shine under specific circumstances. Take the case of the Franklin U.S. Low Volatility High Dividend Index ETF (NASDAQ: LVHD).

Love LVHD for a Less Bumpy Ride, Big Dividends

Experienced investors know that dividend exchange traded funds often emphasize one of two methodologies — focusing on yield or emphasizing payout growth. However, some stocks that are consistent dividend growers also sport above-average yields, while some in the noteworthy yield camp are also reliable boosters of payouts.

Dividend Outlook Supports Case for This ETF

With the S&P 500 coming off its worst first-half showing in 50 years, it's fair to say that not much is working with equities this year. However, investors shouldn't abandon all hope.

LVHD Has Right Recipe for Turbulent Times

iShares Edge MSCI Min Vol USA ETF

The first half of 2022 was brutal for equity investors, with the S&P 500 dropping 20.6% and marking the worst start to the year since 1970. That sent some ETF investors into low and minimum-volatility strategies, with FactSet data showing a net inflow of $2.16 billion into non-leveraged funds with those phrases in their names.

Advisors Reveal Their Low-Vol Picks

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

Broadly speaking, dividend exchange traded funds are outperforming the broader market this year, but investors still need to evaluate what's driving that outperformance. Typically, dividend ETFs fall into one of two categories: payout growth or high dividends/yield weighting.

High Time for This High Dividend ETF

Vanguard High Dividend Yield ETF

Investors fearful of things getting much worse in an already challenging year for markets can find some solace in diversification.

Two dividend ETFs to weather a recession

Legg Mason International Low Volatility High Dividend ETF

The Legg Mason Low-Volatility High-Dividend ETF (NASDAQ: LVHD) and the Legg Mason International Low Volatility High Dividend ETF (CBOE:LVHI) — two of the more venerable names among high-dividend low-volatility exchange traded funds — are changing names. LVHD will become the Franklin U.S. Low Volatility High Dividend Index ETF while LVHI is slated to become the Franklin International [.

Name Changes Coming for Pair of Low-Volatility ETFs

LVHD implements a dividend strategy intended to limit risks. More than 40% of asset value is in two sectors: utilities and consumer staples.

LVHD: Low-Volatility High Dividend ETF

Despite rising interest, plenty of high-dividend equities are outperforming the broader market this year. Some are even generating positive returns.

High Dividends, Low Volatility Still an Ideal Match

Low-volatility funds, which aim to offer a smoother ride, are living up to their name. Since the start of the year, U.S. stock funds with low-volatility strategies have dipped 7.7% on average, while the S&P 500 Index has lost 13.1%.

Legg Mason Low Volatility High Dividend ETF (LVHD) Pays Off

Should Legg Mason Low Volatility High Dividend ETF (LVHD) Be on Your Investing Radar?

Is Legg Mason Low Volatility High Dividend ETF (LVHD) a Strong ETF Right Now?

LVHD is a passively managed fund focusing on generous U.S. dividend payers exhibiting low volatility and profitability characteristics.

LVHD: Remarkable Quality But No Alpha, Inconsistent Distributions Growth

iShares U.S. Home Construction ETF

Amplify Inflation Fighter ETF

Vanguard Small Cap Value ETF

Wall Street has entered March on a shaky note as the Russia-Ukraine tensions and the resultant Western sanctions against Russia has heightened.

5 ETFs to Follow in March for Gains

This value ETF hits a new 52-week high. Are more gains in store for this ETF?

Value ETF (LVHD) Hits New 52-Week High

With first quarter earnings results underway, one way to help mute forthcoming noise is with low volatility ETFs like the Legg Mason Low Volatility High Dividend ETF (LVHD). LVHD helps investors straddle that fine line between risk and reward.

Looking for a Low Volatility ETF at a Low Price?

First Trust Morningstar Dividend Leaders Index Fund

ProShares S&P MidCap 400 Dividend Aristocrats ETF

SPDR S&P Dividend ETF

Victoryshares Dividend Accelerator ETF

These dividend ETFs are hovering at a record high. Most of these ETFs offer yields higher than the benchmark U.S.-treasury yield and some possess stocks that have a strong history of hiking dividends regularly.

5 Dividend ETFs Hovering at Record High

LVHD is a low volatility, high dividend ETF that seeks to provide investors with reasonably high and sustainable dividend payments while specifically controlling for downside risk. However, since its inception five years ago, LVHD has significantly underperformed the S&P 500 and failed in its goals of protecting investors from this risk.

LVHD: Another Example Of Low-Volatility ETFs Not Doing Their Jobs

LVHD strategy and performance. Comparing it with simple strategies.

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