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Is John Hancock Multifactor Large Cap ETF (JHML) a Strong ETF Right Now?

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Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the John Hancock Multifactor Large Cap ETF (JHML - Free Report) is a smart beta exchange traded fund launched on 09/28/2015.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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

The fund is sponsored by John Hancock. It has amassed assets over $706.87 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. JHML seeks to match the performance of the John Hancock Dimensional Large Cap Index before fees and expenses.

The John Hancock Dimensional Large Cap Index comprises of a subset of securities in the U.S. Universe issued by companies whose market capitalizations are larger than that of the 801st largest U.S. company.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.29%, making it on par with most peer products in the space.

JHML's 12-month trailing dividend yield is 1.44%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector - about 24.30% of the portfolio. Healthcare and Financials round out the top three.

Taking into account individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 3.46% of the fund's total assets, followed by Apple Inc (AAPL - Free Report) and Amazon.com Inc (AMZN - Free Report) .

Its top 10 holdings account for approximately 15.01% of JHML's total assets under management.

Performance and Risk

So far this year, JHML has added about 1.22%, and is down about -10.55% in the last one year (as of 03/27/2023). During this past 52-week period, the fund has traded between $45.43 and $57.85.

The ETF has a beta of 1.01 and standard deviation of 21.21% for the trailing three-year period, making it a medium risk choice in the space. With about 771 holdings, it effectively diversifies company-specific risk.

Alternatives

John Hancock Multifactor Large Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $296.53 billion in assets, SPDR S&P 500 ETF has $365.64 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

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 - Large 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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