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Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the John Hancock Multifactor Small Cap ETF (JHSC - Free Report) is a smart beta exchange traded fund launched on 11/08/2017.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
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
JHSC is managed by John Hancock, and this fund has amassed over $324.95 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.42%.
It's 12-month trailing dividend yield comes in at 1.07%.
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 19.40% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, American Campus Communities accounts for about 0.64% of total assets, followed by Popular Inc (BPOP - Free Report) and Nexstar Media Group Inc Cl A (NXST - Free Report) .
JHSC's top 10 holdings account for about 4.98% of its total assets under management.
Performance and Risk
So far this year, JHSC has lost about -18.06%, and is down about -17.11% in the last one year (as of 10/25/2022). During this past 52-week period, the fund has traded between $28.05 and $37.86.
The ETF has a beta of 1.11 and standard deviation of 28.32% 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 $50.13 billion in assets, iShares Core S&P SmallCap ETF has $62.93 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?
Designed to provide broad exposure to the Style Box - Small Cap Blend category of the market, the John Hancock Multifactor Small Cap ETF (JHSC - Free Report) is a smart beta exchange traded fund launched on 11/08/2017.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
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
JHSC is managed by John Hancock, and this fund has amassed over $324.95 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund 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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.42%.
It's 12-month trailing dividend yield comes in at 1.07%.
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 19.40% of the portfolio, the fund has heaviest allocation to the Industrials sector; Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, American Campus Communities accounts for about 0.64% of total assets, followed by Popular Inc (BPOP - Free Report) and Nexstar Media Group Inc Cl A (NXST - Free Report) .
JHSC's top 10 holdings account for about 4.98% of its total assets under management.
Performance and Risk
So far this year, JHSC has lost about -18.06%, and is down about -17.11% in the last one year (as of 10/25/2022). During this past 52-week period, the fund has traded between $28.05 and $37.86.
The ETF has a beta of 1.11 and standard deviation of 28.32% 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 $50.13 billion in assets, iShares Core S&P SmallCap ETF has $62.93 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.