FLGB ETF

Franklin FTSE United Kingdom ETF offers a 4.2% dividend yield and low expense ratio, but has a weaker long-term growth outlook compared to the S&P 500. FLGB's portfolio is diversified with low concentration risk but is heavily weighted towards defensive sectors, limiting its growth potential. The improving macroeconomic environment in the U.K. boosts FLGB's short-term earnings growth outlook for 2025 and 2026, enhancing near-term opportunities.

VettaFi's Head of Research Todd Rosenbluth discussed the Franklin FTSE United Kingdom ETF (FLGB) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” For more news, information, and analysis, visit VettaFi | ETF Trends.

Faced with a poor domestic economic outlook and a perceived valuation discount to US equities, the picture for British stocks doesn't look so rosy. Despite holding UK-listed stocks, the Franklin FTSE United Kingdom ETF actually has fairly limited exposure to the UK. Most of its holdings by weight are international blue chips. UK-listed stocks do indeed look quite cheap. Current P/E ratios appear modest, while averaging things across the business cycle still leaves the valuation at a discount to the historical average.

This year's rally in UK equities has begun to show signs of slowing in recent months. A combination of high inflation and lower growth domestically are weighing on the outlook, along with an ongoing external slowdown. The Franklin FTSE United Kingdom ETF isn't cheap relative to earnings and could come under pressure ahead of more rate hikes.