Back to top

Image: Bigstock

Is John Hancock Multifactor Large Cap ETF (JHML) a Strong ETF Right Now?

Read MoreHide Full Article

A smart beta exchange traded fund, the John Hancock Multifactor Large Cap ETF (JHML - Free Report) debuted on 09/28/2015, and offers broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is managed by John Hancock, and has been able to amass over $785.02 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. JHML, before fees and expenses, seeks to match the performance of the John Hancock Dimensional Large Cap Index.

The John Hancock Dimensional Large Cap Index comprises of a subset of securities in the U.S. Universe issued by companies whose market capitalizations are larger than that of the 801st largest U.S. company.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.29%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.22%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

JHML's heaviest allocation is in the Information Technology sector, which is about 23.30% of the portfolio. Its Healthcare and Financials round out the top three.

When you look at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 3.89% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Amazon.com Inc (AMZN - Free Report) .

Performance and Risk

The ETF has lost about -11.75% so far this year and it's up approximately 5.45% in the last one year (as of 03/15/2022). In the past 52-week period, it has traded between $49.64 and $59.70.

JHML has a beta of 1.02 and standard deviation of 23% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 786 holdings, it effectively diversifies company-specific risk.

Alternatives

John Hancock Multifactor Large Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $303.06 billion in assets, SPDR S&P 500 ETF has $377.30 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Published in