Franklin International Core Dividend Tilt Index ETF

DIVI

Market cap $1.85B

Franklin International Core Dividend Tilt Index ETF is rated a buy for its superior risk-adjusted returns vs. the market benchmark VEA. DIVI's strategy focuses on dividend quality, delivering lower drawdowns and volatility without sacrificing total returns, outperforming VEA on several time horizons. The ETF offers a low expense ratio (0.09%) and strong downside protection, though liquidity remains a concern due to lower trading volume and higher bid/ask spreads.

DIVI stands out among international dividend ETFs due to its methodology emphasizing value, earnings stability, and profitability, not just high yield. The ETF's optimization process allows for growth exposure while maintaining a focus on stable dividends, avoiding typical value traps and sector concentration. DIVI's portfolio is highly diversified by stock and sector, with low concentration risk and a strong track record of superior risk-adjusted returns versus peers.

Franklin International Core Dividend Tilt Index ETF offers exposure to developed world equities, ignoring the U.S. and Canada. In the current iteration, DIVI is heavy in Japanese, UK, and Australian stocks. Financials and industrials are key sectors. By international dividend ETF standards, its expense ratio is wafer-thin at just 11 bps.

DIVI is a buy due to its broad diversification, solid capital appreciation, and dividend income from international equities. Compared to leading peer international dividend funds, DIVI has the lowest fees and strongest performance when considering capital appreciation and dividend yield. International equities are expected to perform well due to forecast interest rate cuts, relative currency strengths, and attractive valuations compared to U.S. stocks.

Franklin Templeton Head of Global Index Portfolio Management Dina Ting discusses the Franklin International Core Dividend Tilt Index ETF (Ticker: DIVI) and the attractiveness of international ETFs. She speaks with Katie Greifeld and Eric Balchunas on "Bloomberg ETF IQ.

Franklin International Core Dividend Tilt Index ETF seeks to incorporate a dividend tilt and offers efficient access to developed market equities outside of North America. DIVI is not particularly stable, but has a good track record of risk-adjusted returns. DIVI focuses on European stocks, which account for 60% of its portfolio, and may benefit from a pickup in consumer spending and grants from the recovery fund.

Franklin International Core Dividend Tilt Index ETF aims to provide an enhanced yield in developed markets with a portfolio heavy in Japan and financials. DIVI has outperformed its benchmark and five competitors over the last 18 months and has a lower fee. Data prior to August 2022 are irrelevant due to a reshuffling of the fund.

Although the natural inclination of retail investors is to invest in U.S.-listed stocks because they're the ones people are most familiar with, it makes sense to look beyond America's borders with global ETFs. Unlike most countries, home-country bias isn't nearly as big a deal because the U.S. market capitalization is $46.2 trillion, accounting for 42.5% of the world market cap.