Franklin International Low Volatility High Dividend Index ETF (LVHI) seeks to track an index that measures international developed market stocks exhibiting both lower volatility characteristics and higher dividend yields. This income-focused equity ETF targets companies outside the U.S. that demonstrate stable price movements while providing above-average dividend income to investors.
How It Works
LVHI uses a rules-based methodology that screens international developed market stocks for dual criteria: low historical price volatility and high dividend yields relative to market averages. The fund employs a passive approach, weighting holdings based on a combination of dividend yield and volatility metrics rather than market capitalization. Portfolio rebalancing occurs semi-annually to maintain target characteristics and capture changes in dividend policies and volatility patterns across international markets.
Key Features
- Combines low volatility factor with high dividend yield screening for potentially smoother income generation than traditional international dividend ETFs
- 4.86% dividend yield provides attractive income stream from international developed market companies with established dividend payment histories
- 0.00% expense ratio eliminates management fees, allowing investors to capture full dividend income without annual cost drag
Risks
- This ETF can lose value when international dividend-paying stocks decline, particularly during global economic downturns when dividend cuts become widespread across markets
- Currency fluctuations can significantly impact returns as foreign dividends convert to U.S. dollars, potentially reducing income during dollar strength periods
- Low volatility screening may create sector concentration in utilities and consumer staples, increasing vulnerability to interest rate changes and defensive sector rotations
Who Should Own This
Best suited for income-focused investors with 3-5 year time horizons seeking international dividend exposure with reduced volatility. Medium risk tolerance required due to currency and international market risks. Works as satellite holding (10-20% of portfolio) for investors wanting to diversify U.S.-heavy dividend strategies while maintaining income generation focus.