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Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?
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A smart beta exchange traded fund, the John Hancock Multifactor Small Cap ETF (JHSC - Free Report) debuted on 11/08/2017, and offers broad exposure to the Style Box - Small 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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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. JHSC has been able to amass assets over $364.30 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.42%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.97%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
JHSC's heaviest allocation is in the Industrials sector, which is about 18.50% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, American Campus Communities accounts for about 0.64% of the fund's total assets, followed by Popular Inc (BPOP - Free Report) and Nexstar Media Group Inc Cl A (NXST - Free Report) .
Its top 10 holdings account for approximately 4.98% of JHSC's total assets under management.
Performance and Risk
Year-to-date, the John Hancock Multifactor Small Cap ETF has lost about -9.57% so far, and is down about -2.08% over the last 12 months (as of 08/22/2022). JHSC has traded between $28.30 and $37.86 in this past 52-week period.
The fund has a beta of 1.13 and standard deviation of 27.75% for the trailing three-year period. With about 431 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 SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $56.56 billion in assets, iShares Core S&P SmallCap ETF has $70.51 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?
A smart beta exchange traded fund, the John Hancock Multifactor Small Cap ETF (JHSC - Free Report) debuted on 11/08/2017, and offers broad exposure to the Style Box - Small 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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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. JHSC has been able to amass assets over $364.30 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. This particular fund seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.42%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 0.97%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
JHSC's heaviest allocation is in the Industrials sector, which is about 18.50% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
Taking into account individual holdings, American Campus Communities accounts for about 0.64% of the fund's total assets, followed by Popular Inc (BPOP - Free Report) and Nexstar Media Group Inc Cl A (NXST - Free Report) .
Its top 10 holdings account for approximately 4.98% of JHSC's total assets under management.
Performance and Risk
Year-to-date, the John Hancock Multifactor Small Cap ETF has lost about -9.57% so far, and is down about -2.08% over the last 12 months (as of 08/22/2022). JHSC has traded between $28.30 and $37.86 in this past 52-week period.
The fund has a beta of 1.13 and standard deviation of 27.75% for the trailing three-year period. With about 431 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 SmallCap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $56.56 billion in assets, iShares Core S&P SmallCap ETF has $70.51 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.