ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Volatility Resource Channel
  2. Love LVHD for a Smoother Ride, Big Dividends
Volatility Resource Channel
Share

Love LVHD for a Smoother Ride, Big Dividends

Tom LydonAug 09, 2022
2022-08-09

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 (LVHD A). Amid 2022’s turbulent market climate, high dividend and low volatility are two of the best-performing factors on a standalone basis.

Combine the pair under one umbrella, as does LVHD, and the results can be potent. LVHD’s merits are on full display this year as the Franklin Templeton fund is down just 3% compared to a loss of 13% for the S&P 500.

“Minimizing volatility has been an effective strategy so far in 2022,” notes Morningstar analyst Bryan Armour. “But its success isn’t limited to recent market turbulence. Over the past 10 years, this fund has pummeled category peers on a risk-adjusted basis, thanks to its low volatility and competitive returns. Its low cost also provides a durable advantage over the long run. There’s no doubt that this fund will continue to take the edge off rocky markets.”

While LVHD is an index-based ETF, it has some constraints and rules that could make it a more appealing mousetrap than standard low volatility ETFs. LVHD’s dividend yield of 2.85% is tempting, but the fund’s methodology also ensures an element of quality.

“Cutting down risk doesn’t solely come from favoring stocks with lower return volatility. The strategy requires companies to have sufficient earnings and cash flow to support their dividend payments and penalizes stocks with higher earnings volatility,” added Armour.

As noted above, LVHD’s payout yield of 2.85% stands out relative to broad market benchmarks, but it’s not alarmingly high. That’s important because it’s an indication that while the fund is framed as a high-dividend strategy, its roster isn’t comprised of companies that could be burdened by dividend obligations, leading to eventual cuts or suspensions. So while LVHD’s yield isn’t high to point of being jaw-dropping, the fund does an admirable job of being a best of both worlds play.

“The fund’s focus on limiting risk moderates its quest for yield. But this approach has been effective, nonetheless. The strategy has been a consistent outperformer during periods of heavy declines, like so far in 2022 and during the COVID-19 drawdown in 2020. The fund has exhibited significantly lower volatility and outperformed its average category peer on risk-adjusted terms over the past five years,” concluded Armour.

For more news, information, and strategy, visit the Volatility Resource Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X