A smart beta exchange traded fund, the John Hancock Multifactor Mid Cap ETF (
JHMM Quick Quote JHMM - Free Report) debuted on 09/28/2015, and offers broad exposure to the Style Box - Mid Cap Blend category of the market. What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
JHMM is managed by John Hancock, and this fund has amassed over $2.37 billion, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund seeks to match the performance of the John Hancock Dimensional Mid Cap Index before fees and expenses.
The John Hancock Dimensional Mid Cap Index comprises of a subset of securities in the U.S. Universe issued by companies whose market capitalizations are between the 200th and 951st largest U.S. company.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.42%.
JHMM's 12-month trailing dividend yield is 0.76%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For JHMM, it has heaviest allocation in the Information Technology sector --about 19.10% of the portfolio --while Industrials and Financials round out the top three.
Looking at individual holdings, Marvell Technology Inc (
MRVL Quick Quote MRVL - Free Report) accounts for about 0.53% of total assets, followed by Parker Hannifin Corp ( PH Quick Quote PH - Free Report) and Skyworks Solutions Inc ( SWKS Quick Quote SWKS - Free Report) .
Its top 10 holdings account for approximately 4.13% of JHMM's total assets under management.
Performance and Risk
So far this year, JHMM has added about 18.50%, and was up about 31.96% in the last one year (as of 10/12/2021). During this past 52-week period, the fund has traded between $37.93 and $54.37.
The ETF has a beta of 1.12 and standard deviation of 25.30% for the trailing three-year period, making it a medium risk choice in the space. With about 670 holdings, it effectively diversifies company-specific risk.
John Hancock Multifactor Mid Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard MidCap ETF (
VO Quick Quote VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core S&P MidCap ETF ( IJH Quick Quote IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $51.31 billion in assets, iShares Core S&P MidCap ETF has $62.80 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 - Mid Cap Blend.
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.