Active Dividend Growth ETFs in a Volatile Market: Why FRIZ Offers a Strategic Edge for Income-Focused Investors in 2025

In 2025, markets remain a minefield of geopolitical tensions, inflationary pressures, and trade policy shifts. For income-focused investors, the challenge is clear: how to balance the need for steady dividends with the risks of volatility. Enter the Franklin Dividend Growth ETF (FRIZ), an actively managed fund that leverages Franklin Templeton’s deep expertise in dividend growth investing to offer a compelling alternative to passive strategies.

FRIZ’s core thesis is simple yet powerful: target U.S. companies with resilient business models, strong governance, and sustainable competitive advantages. Unlike passive ETFs that track broad indices, FRIZ’s active management allows its team—led by the same professionals behind the Franklin Rising Dividends strategy—to adapt to shifting market conditions. This flexibility is critical in 2025, where rigid index-based approaches may struggle to navigate sector-specific disruptions [1].

Consider the expense ratio: FRIZ charges 0.49%, which is higher than passive peers like the Schwab U.S. Dividend Equity ETF (SCHD) at 0.06% [2]. However, active management isn’t just about fees—it’s about outcomes. FRIZ’s high-conviction portfolio, diversified across industries and market caps, aims to avoid overexposure to sectors prone to volatility. For example, while passive ETFs like SCHD have increased Energy sector allocations in 2025, FRIZ’s team can selectively overweight or underweight sectors based on fundamental research [3]. This tailored approach may reduce downside risk during market selloffs.

Moreover, FRIZ’s focus on dividend growth—rather than just yield—aligns with long-term income sustainability. The fund targets at least 80% of its assets in companies with a history of consistent dividend increases or strong potential for future growth [4]. This contrasts with passive ETFs like the Vanguard High Dividend Yield ETF (VYM), which prioritize current yield over growth, potentially exposing investors to companies with weaker balance sheets [5].

Critics may argue that active management introduces higher costs and performance uncertainty. Yet in volatile markets, FRIZ’s strategy of identifying companies with “sustainable competitive advantages” [1] could mitigate losses. For instance, during the spring 2025 market turbulence caused by trade policy shifts, FRIZ’s team could pivot to sectors less impacted by tariffs, whereas passive ETFs would remain tethered to their indices [6].

Of course, FRIZ is not without risks. Equity investments, even those with strong dividends, are vulnerable to broad market declines. However, its active risk management—rooted in Franklin Equity Group’s 60+ investment professionals—offers a layer of protection that passive strategies lack [7]. This is particularly valuable in 2025, where macroeconomic uncertainty demands agility.

For income-focused investors, the choice between FRIZ and passive ETFs hinges on priorities. If minimizing fees is paramount, passive options like SCHD or VIG remain attractive. But for those seeking a balance of income stability and growth potential in a volatile environment, FRIZ’s active approach—and its track record of dividend growth—makes it a strategic edge worth considering.

Source:
[1] Franklin Templeton Launches Franklin Dividend Growth ETF (FRIZ),
https://www.businesswire.com/news/home/20250829328318/en/
[2] 7 Best Dividend ETFs to Buy Now,
https://money.usnews.com/investing/articles/best-dividend-etfs-to-buy-now
[3] Franklin Templeton Launches Franklin Dividend Growth ETF (FRIZ),
https://www.morningstar.com/news/business-wire/20250829328318/franklin-templeton-launches-franklin-dividend-growth-etf-friz
[4] Franklin Dividend Growth ETF (FRIZ) - Yahoo Finance,
https://finance.yahoo.com/quote/FRIZ/
[5] The Top High-Dividend ETFs for Passive Income in 2025,
https://www.morningstar.com/funds/top-high-dividend-etfs-passive-income-2025
[6] Financial Market Volatility in the Spring of 2025,
https://www.stlouisfed.org/on-the-economy/2025/jun/financial-market-volatility-spring-2025
[7] Franklin Templeton Launches Franklin Dividend Growth ETF (FRIZ),
https://www.theglobeandmail.com/investing/markets/markets-news/Business%20Wire/34481175/franklin-templeton-launches-franklin-dividend-growth-etf-friz/