Franklin Intl Low Volatility Hi Div ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in volatility exposure and an overweight in yield exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

TotalEnergies SE

SPDR Bloomberg Barclays Mortgage Backed Bond ETF

Rio Tinto plc Sponsored

Tractor Supply

Rogers

Bank of Nova Scotia

Canadian Imperial Bank of Commerce

Ormat Technologies

Genpact

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Franklin Intl Low Volatil Hi Div ETF earns an Above Average Process Pillar rating. 

The most substantial contributor to the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category average, which suggests that the managers have shown skill in their allocation of risk. This fund tracks an index, which also increases its process rating. Historical data, such as Morningstar's Active/Passive Barometer, shows that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Lastly, the process is limited by its parent firm's disappointing risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.5 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 This strategy targets deeper value plays than its peers’ average in the Foreign Large Value Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, the managers have consistently had exposure to low-volatility stocks over the past few years, or those whose relative returns look best when the markets are their worst. Such holdings can limit a strategy's downside, but cause it to lag in bull markets. In the latest month, the strategy was also less exposed to the Volatility factor compared with Morningstar Category peers. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, this strategy has constantly held more illiquid stocks, evidenced by holdings' low trading volume, resulting in higher liquidity risk exposure than peers. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In recent months, the strategy also had less Liquidity factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in communication services and utilities relative to the category average by 6.8 and 6.0 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and industrials, underweight the average by 7.0 and 6.7 percentage points of assets, respectively. The portfolio is positioned across 140 holdings and is relatively concentrated. Specifically, 27.9% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 13.9%. And finally, in terms of portfolio turnover, on a year-over-year basis, 78% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Above Average

Process

Franklin Templeton’s  team is comparable to peers, resulting in an Average People Pillar rating. There are four managers listed on the fund: Jose Maldonado, Christopher Floyd, Jacqueline Kenney, Vaneet Chadha. The team is well equipped, with an average of 11 years of portfolio management experience. Together, they manage a total of two strategies, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

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 International Low Volatility High Dividend ETF

LVHI tracks an all-cap index of developed ex-US stocks, selected and weighted to emphasize profitability, high dividends, low price volatility and low earnings volatility.

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Dividend stocks, including REITs and utilities, have underperformed in recent years. Rising interest rates and increasing costs of capital have contributed to the underperformance. The beginnings of a strong dividend stock rally may have just begun on the back of some very good news.

Very Good News For Dividend Stocks

Franklin International Low Volatility High Dividend Index ETF is a currency-hedged fund holding 118 dividend stocks from developed countries. Equity funds with a currency hedge involve two bullish bets, in a stock strategy and in the U.S. Dollar. The LVHI ETF has underperformed its competitors since its inception and has variable and unpredictable distributions due to currency rates.

LVHI: Other Currency-Hedged ETFs Look More Attractive

Franklin International Low Volatility High Dividend Index ETF targets low-volatility stocks with high yield. The LVHI ETF uses a proprietary methodology to calculate a composite "stable yield" score. LVHI has been outperforming the S&P 500 since 2022 and offers an attractive dividend yield.

LVHI: An Interesting And Potentially Defensive Fund

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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

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Sure, there are U.S. Treasuries. Fears of more interest rate hikes have put the 10-year Treasury note yield above 4.3%, its highest level since the 2007 financial crisis.

3 Low-Cost Equity ETFs With High Dividends

US stocks have outperformed foreign equities in recent years, but hedging forex bets can help mitigate underperformance in international holdings during times of dollar strength. The Franklin International Low Volatility High Dividend Index ETF hedges currency exposure to reduce volatility and has performed well. LVHI has a moderate expense ratio, pays a high trailing 12-month dividend, and has a solid portfolio with attractive valuation and geographic diversification.

LVHI: Focused Strategy, Diversified Globally, But Near-Term Caution Warranted

Franklin International Low Volatility High Dividend Index ETF is a currency-hedged global dividend ETF. The LVHI ETF is well-diversified across countries, sectors and holdings.

LVHI: Hedged And Double-Edged

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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.

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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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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).

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LVHI tracks an index that selects low-volatility high-dividend stocks in developed markets outside the United States. It has an attractive dividend yield based on its TTM distributions and current price.

LVHI: High Yield, Low Expectations

Global X Superdividend ETF

Atlanta Fed President Raphael Bostic said the central bank should boost interest rates above 5% by early in the second quarter, per Bloomberg.

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Flexshares US Quality Low Volatility Index Fund

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.

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Vanguard Total International Stock ETF

This has been a terrible year for global markets. Still, some ETFs breezed past the S&P 500.

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LVHI is a currency-hedged ex-U.S. dividend ETF. Its top 2 countries are Japan and the U.K.

LVHI: Unconvincing Low Volatility ETF

Dividends are all the rage right now, with investors clamoring to add income to their equity portfolios as serious challenges loom for the market in the new year. For those investors looking to diversify their dividends outside of U.S.

Go International to Diversify Your Dividends in ETF LVHI

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

Markets may have leapt with figurative joy this week following the softer-than-expected CPI print, but it's still not clear whether the economy is out of the woods yet.

Trust Dividends in Wild Markets via Low-Vol Dividend LVHI

LVHI has outperformed the FTSE All-World ex US Index ETF since its inception and this year. The dollar's strength has been a challenge for most international products but LVHI seeks to mitigate this.

The Franklin International Low Volatility High Dividend ETF: Worth A Look

Home country bias is a factor that more investors should be aware of, and with that in mind, it's relevant to the 2022 equity income discussion.

Looking Into LVHI for Less Volatile International Dividends

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

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May is infamous for the stock market. This May too has not been free from shockwaves thanks to rising rate worries due to a hawkish Fed.

News for Legg Mason International Low Volatility High Dividend ETF ETF (LVHI)