Chuck Jaffe: One fund, on point for today. The expert to talk about it. Welcome to the ETF of the Week!

Yes, this is the ETF of the Week, where we get the latest take from Todd Rosenbluth, the head of research at VettaFi. And if you go to VettaFi.com you’ll find all the tools that you need to be a savvier, smarter investor in exchange-traded funds, and to get more details on the new newsworthy, trending and timely ETFs that we discuss here.

Todd Rosenbluth, great to chat with you again.

Todd Rosenbluth: It’s great to be back.

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The Franklin International Low Volatility High Dividend ETF. LVHI.

Chuck Jaffe: LVHI, the Franklin International Low Volatility High Dividend Index ETF. An interesting pick right now. A lot in the name. But, there’s more than the name in why you picked it. So, why this fund right now?

Todd Rosenbluth: Well, we’ll probably dive into each of the aspects of the name. The international, the low volatility, and the high dividend ETF. So, why did we pick this? We find that investors still are probably underexposed to international equities, which have outperformed U.S. equities through the first roughly seven months of 2025. We think one of the reasons they might be [staying away from international equities]is one: They didn’t pay as much attention overseas, but also they’re worried about what’s going on.

There’s a trade war. Likely by the time that people are watching this, that might be on hold. It might be underway. It’s not exactly clear. You can reduce your risk profile and get international exposure. And a couple of quick things. This is a very popular fund this year. It’s gathered more than $1 billion. It’s been around for a few years.

So much so that it is a Morningstar five star rating. That caught my eye also. I’m sure we’ll dive into that, in terms of its track record, but this is a strong fund for people who want a lower risk way to access overseas markets.

Chuck Jaffe: Well, okay. So that covers the international. I mean, I want to jump to the end of the name because it is the Franklin International Low Volatility High Dividend Index ETF. And you’ve been trending strongly — you always have, because it also makes a better story for us here on ETF of the Week — towards actively managed funds.

So, why are you not using active management in this case?

Todd Rosenbluth: Some investors are going active and some are not. So, we want to give people the choice. This is a rules-based approach from Franklin. It covers both the low volatility set and the high dividend set and the overlapping there. This is perhaps a cheaper way to get exposure to a smart way of investing, as opposed to a market-cap weighted approach to investing.

Because it’s less expensive than what you’d find for an active ETF, at 40 basis points. We want to give people the choice, and they’re choosing, in many cases, an index-based approach to get overseas exposure.

Chuck Jaffe: So, let’s go back and explore the other remaining elements in this fund. Low volatility. I find it very interesting that you’re looking at low volatility now, because as we record this, we’ve seen 18 straight days where the stock market didn’t even move 1% on the day. Now, it’s not a record streak by any stretch of the imagination. But it is a long streak.

And so, while everybody’s been saying oh, this market has heightened volatility… Well, we had it in April. We don’t have it now.

Todd Rosenbluth: Well, so I’ll go with the adage that past performance is not indicative of future results. Just because 18 times in a row it hasn’t happened doesn’t mean that we could not see more volatility, okay? The market is essentially saying there isn’t going to be a trade war. There aren’t going to be tariffs in place. The market continues to climb higher, both U.S. stocks and international stocks.

Now, I don’t know that everybody is comfortable with that. Even though the consensus suggests that they’re comfortable with it. So, if an investor is concerned about volatility because it feels like there might be some tariffs to get put in place, for some of the countries, you can get exposure to the stocks that are least volatile. Now, again, the stocks, not necessarily the countries.

So, this is an ETF that, as I looked at it coming into this conversation, was overexposed to Canada versus a broader benchmark. Canada is the largest of its country exposure, roughly 14%. And this is an ETF that is underexposed relative to its benchmark to Japan. Now, Japan is 13%. But for most developed market indices, Japan is around 20%.

So more exposure to Canada and Switzerland, which I didn’t include, less exposure to Japan at the stock level, rolling up to those countries.

Chuck Jaffe: Last element in the name of the fund. High dividend. How high? What’s the yield? And what’s the yield we would expect from this?

Todd Rosenbluth: So the yield is, I believe, 4%, the SEC yield is. So, that’s above average. And what you end up getting, this is going to choose companies that have both a low volatility and a high dividend attributed to it. So, as I look at the holdings off-screen, for those of you that are watching on video, Novartis, Shell, Suncor Energy, Canadian Natural Resources. These are some of the stocks that you’d find within the top 10 holdings within the portfolio.

So, 4%, that’s above average than what we find in a market-cap weighted approach, but it’s not super high that I’m concerned. I think we’ve talked about a high dividend yielding ETF, when we were around July 4. This is similar, in that it looks for the higher dividend yielding stocks, but you’re not going to have as much of that dividend risk if the yield was seven, eight, [or]nine percent on the individual stock level.

Chuck Jaffe: I’ve got to go back to something you talked about, which is: This is a fund that gets five stars from Morningstar. And oh, by the way, if you took a look, well, last year, 2024, it was at the very top of its peer group. It was the number one fund in the Large Value category. But if you look now, if somebody goes to Morningstar data now after hearing us talk, they’re going to find that it’s not at the top.

In fact, it’s at the very bottom of that same peer group. It is up 10.5% roughly for the year, but it’s dramatically lagging the category. And this is a fund that has shown it was number one in its peer group in 2024. It was number one in 2022. Was number one in 2018. But it’s had two years in 2017 and 2020 where it was in the bottom five percent.

Like I said, halfway through this year, dead last. So, what about that, in terms of volatility within a peer group and that characteristic of a fund that can be a little bit feast or famine? Again, tremendous long term record. If you’ve ridden through the doldrums, you’ve been okay. But it’s not always easy to ride through the rough parts.

Todd Rosenbluth: So, I’m glad you called it out. I’m not looking at the data right now as you and I are talking. Although I did notice this data and anticipated this might be a topic of conversation. To me, what this fund is, what LVHI is, is consistent. So, it does well when international markets do okay, or are struggling, and gives you exposure, but gives you some of that upside participation.

But when international markets or developed international markets are rocketing higher, this steady eddy approach to investing — lower volatility, high dividend strategy — is going to be towards the bottom. You should still probably be happy with a 10–11% year-to-date return. Obviously, not as happy as if you were in a traditional approach, but this is a more defensive way.

This is a lower-beta approach or lower volatility, lower-risk approach to investing. So U.S. [or]non-U.S., you’re going to find out that when you take a lower volatility approach, you’re going to do okay in the choppier time periods internationally, and do less okay on a relative basis, but still be positive in those other markets. I think that’s something that some investors should find appealing.

$1 billion worth of investors’ money has gone into it, agreeing with it. That’s why I wanted to highlight it today.

Chuck Jaffe: It’s LVHI, the Franklin International Low Volatility High Dividend Index ETF. It’s the highlight, and it’s the ETF of the Week from Todd Rosenbluth. Todd, great stuff as always. Thanks for joining me to talk about it.

Todd Rosenbluth: It’s been a pleasure!

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money life with Chuck Jaffe. And yeah, I’m Chuck Jaffe. It would be great if you would check out my hourlong weekday podcast by going to the MoneyLifeShow.com, or by searching for it wherever you find your favorite podcast.

Now, if you’re searching for more information on your favorite ETFs, or maybe what’s going to become your favorite ETFs, go to VettaFi.com, where they’ve got a full suite of tools to help you make yourself a better investor. They’re on X Twitter at @Vetta_Fi. Todd Rosenbluth, their head of research, my guest here on ETF of the Week, he’s on X as well. He’s at @ToddRosenbluth. The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following along on your favorite podcast app. And if you got questions or anything else, make sure you send them in. We’d love to hear from you.

Until we’re back next week with another new fund for you to consider, happy investing everybody!

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