Franklin Templeton has launched a new ETF in Europe, providing investors with access to a broad portfolio of US equities with an enhanced dividend yield.

The ETF will appeal to income-focused investors seeking diversified exposure to US equities.

The Franklin US Dividend Tilt UCITS ETF has been listed on the London Stock Exchange in US dollars (UDIV LN) and pound sterling (DIVU LN) as well as on Deutsche Börse Xetra (UDVD GY) and Borsa Italiana (USDIV IM) in euros.

It comes with an expense ratio of 0.12%.

The ETF tracks the Morningstar US Dividend Enhanced Select Index, which is designed to construct a portfolio of stocks with a higher dividend yield compared to its parent benchmark, the Morningstar US Target Market Exposure Index, while maintaining a controlled tracking error.

The parent index covers US large- and mid-cap stocks, representing the top 85% of the investable float-adjusted market capitalization in the United States.

The index construction employs a constrained optimization framework that prioritizes maximizing dividend yield while ensuring diversification and managing risk.

The optimization’s constraints include maintaining a tracking error within 120 basis points relative to the parent index, limiting deviations in sector weights to five percentage points from their weights in the parent index, and capping one-way turnover at no more than 5%.

Additionally, the weight of a single security is limited to the lesser of three times its weight in the parent index or its parent weight plus 0.5%, and stocks with minimal weights below 0.5% are removed.

The optimization process is run each quarter.

Through its disciplined methodology, the Franklin US Dividend Tilt UCITS ETF offers a cost-efficient, income-enhancing solution for investors seeking exposure to US equities, combining higher dividend yields with controlled risk and diversification.