Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the Janus Henderson SmallMid Cap Growth Alpha ETF (
JSMD Quick Quote JSMD - Free Report) , a passively managed exchange traded fund launched on 02/23/2016.
The fund is sponsored by Janus Henderson. It has amassed assets over $208.13 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.30%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.30%.
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.
This ETF has heaviest allocation to the Information Technology sector--about 29.10% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Bentley Systems Inc (
BSY Quick Quote BSY - Free Report) accounts for about 3.19% of total assets, followed by Ubiquiti Inc ( UI Quick Quote UI - Free Report) and Ppd Inc .
The top 10 holdings account for about 23.72% of total assets under management.
Performance and Risk
JSMD seeks to match the performance of the Janus Small/Mid Cap Growth Alpha Index before fees and expenses. The Janus Small/Mid Cap Growth Alpha Index selects small- and medium-sized capitalization stocks that are poised for smart growth by evaluating each companys performance in three critical areas: growth, profitability, and capital efficiency.
The ETF has added about 14.06% so far this year and is up roughly 24.12% in the last one year (as of 11/08/2021). In the past 52-week period, it has traded between $55.96 and $70.30.
The ETF has a beta of 1.18 and standard deviation of 25.90% for the trailing three-year period. With about 262 holdings, it effectively diversifies company-specific risk.
Janus Henderson SmallMid Cap Growth Alpha ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, JSMD is a great option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Growth ETF (
IWO Quick Quote IWO - Free Report) and the Vanguard SmallCap Growth ETF ( VBK Quick Quote VBK - Free Report) track a similar index. While iShares Russell 2000 Growth ETF has $12.93 billion in assets, Vanguard SmallCap Growth ETF has $17.39 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%. Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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.