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Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?
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The John Hancock Multifactor Small Cap ETF (JHSC - Free Report) was launched on 11/08/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
JHSC is managed by John Hancock, and this fund has amassed over $350.20 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, JHSC seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX.
The John Hancock Dimensional Small Cap Index is designed to comprise a subset of securities in the U.S. Universe issued by companies whose market capitalizations are smaller than the 750th largest U.S. company but excluding the smallest 4% of U.S. companies at the time of reconstitution.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.42%.
JHSC's 12-month trailing dividend yield is 1.19%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.10% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Information Technology round out the top three.
Taking into account individual holdings, Super Micro Computer Inc (SMCI - Free Report) accounts for about 0.84% of the fund's total assets, followed by Topbuild Corp (BLD - Free Report) and National Instruments Corp .
Its top 10 holdings account for approximately 5.62% of JHSC's total assets under management.
Performance and Risk
The ETF return is roughly 7.73% and is up about 4.75% so far this year and in the past one year (as of 11/20/2023), respectively. JHSC has traded between $29.77 and $34.98 during this last 52-week period.
JHSC has a beta of 1.13 and standard deviation of 20.77% for the trailing three-year period. With about 398 holdings, it effectively diversifies company-specific risk.
Alternatives
John Hancock Multifactor Small Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $54.44 billion in assets, iShares Core S&P Small-Cap ETF has $67.71 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 - Small 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.
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Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?
The John Hancock Multifactor Small Cap ETF (JHSC - Free Report) was launched on 11/08/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
JHSC is managed by John Hancock, and this fund has amassed over $350.20 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, JHSC seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX.
The John Hancock Dimensional Small Cap Index is designed to comprise a subset of securities in the U.S. Universe issued by companies whose market capitalizations are smaller than the 750th largest U.S. company but excluding the smallest 4% of U.S. companies at the time of reconstitution.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.42%.
JHSC's 12-month trailing dividend yield is 1.19%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 21.10% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Information Technology round out the top three.
Taking into account individual holdings, Super Micro Computer Inc (SMCI - Free Report) accounts for about 0.84% of the fund's total assets, followed by Topbuild Corp (BLD - Free Report) and National Instruments Corp .
Its top 10 holdings account for approximately 5.62% of JHSC's total assets under management.
Performance and Risk
The ETF return is roughly 7.73% and is up about 4.75% so far this year and in the past one year (as of 11/20/2023), respectively. JHSC has traded between $29.77 and $34.98 during this last 52-week period.
JHSC has a beta of 1.13 and standard deviation of 20.77% for the trailing three-year period. With about 398 holdings, it effectively diversifies company-specific risk.
Alternatives
John Hancock Multifactor Small Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 ETF (IWM - Free Report) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $54.44 billion in assets, iShares Core S&P Small-Cap ETF has $67.71 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 - Small 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.