Franklin Templeton Investments has expanded its line of LibertyShares smart beta exchange traded funds to now include U.S. equity-focused options to track the various market capitalization segments of domestic markets
On Monday, Franklin Templeton rolled out the Franklin LibertyQ U.S. Equity ETF (BATS: FLQL), Franklin LibertyQ U.S. Mid Cap Equity ETF (BATS: FLQM) and Franklin LibertyQ U.S. Small Cap Equity ETF (BATS: FLQS). FLQL has a 0.25% expense ratio, FLQM has a 0.30% expense ratio and FLQS has a 0.35% expense ratio.
“Our new U.S. equity strategic beta ETFs reflect our ongoing commitment to investors, by developing best-in-class offerings that seek to achieve better risk-adjusted returns over the long term. Leveraging our firm’s 70 years of active management experience, our quantitative approach targets specific factors for consistent sources of return. In our proprietary approach, we place an emphasis on the ‘quality’ factor,” Patrick O’Connor, global head of ETFs at Franklin Templeton Investments, said in a note.
FLQL tries to reflect the performance of the LibertyQ U.S. Large Cap Equity Index, which includes the 1,000 largest issuers based on market-cap taken from the Russell 1000 Index using a methodology developed with Franklin Templeton to reflect the money manager’s desired investment strategy. FLQM tracks the LibertyQ U.S. Mid Cap Equity Index, which is comprised of the 800 smallest issuers taken from the Russell 1000 Index. FLQS follows the Liberty Q U.S. Small Cap Equity Index, which is based on the Russell 2000 or the 2000 of the smallest issuers in the Russell 3000 index.
All three underlying indices specifically screen for U.S. companies in their respective market capitalization targets based on four factors, including quality, value, momentum and low volatility.
The quality factor incorporates measures like return on equity, earnings, variability, cash return on assets and leverage. The value factor incorporates measures such as price-to-earnings, price-to-forward earnings, price-to-book value and dividend yield. The momentum factor covers measures such as 6-month risk adjusted price momentum and 12-month risk-adjusted price momentum. Lastly, the low volatility factors include measures like historical beta, a measure of the volatility of a security relative to the total market.
“First launched in June 2016, our suite of strategic beta ETFs was developed based on feedback from clients, who wanted to be able to access our expertise in an ETF format. We continue to build on the momentum of the initial launch by adding to our LibertyQ suite, which can serve as attractive long-term portfolio holdings,” O’Connor added.
For more information on new fund products, visit our new ETFs category.