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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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by John Hancock, JHSC has amassed assets over $339.59 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, JHSC 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.
Annual operating expenses for JHSC are 0.42%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.09%.
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 Industrials sector - about 23.10% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Emcor Group Inc (EME - Free Report) accounts for about 0.55% of total assets, followed by Iridium Communications Inc (IRDM - Free Report) and Renaissancere Holdings Ltd (RNR - Free Report) .
The top 10 holdings account for about 4.98% of total assets under management.
Performance and Risk
So far this year, JHSC has added roughly 3.27%, and is down about -0.04% in the last one year (as of 05/02/2023). During this past 52-week period, the fund has traded between $28.05 and $34.47.
The ETF has a beta of 1.12 and standard deviation of 22.87% for the trailing three-year period. With about 391 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 Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $49.31 billion in assets, iShares Core S&P Small-Cap ETF has $64.92 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by John Hancock, JHSC has amassed assets over $339.59 million, making it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, JHSC 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.
Annual operating expenses for JHSC are 0.42%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.09%.
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 Industrials sector - about 23.10% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Emcor Group Inc (EME - Free Report) accounts for about 0.55% of total assets, followed by Iridium Communications Inc (IRDM - Free Report) and Renaissancere Holdings Ltd (RNR - Free Report) .
The top 10 holdings account for about 4.98% of total assets under management.
Performance and Risk
So far this year, JHSC has added roughly 3.27%, and is down about -0.04% in the last one year (as of 05/02/2023). During this past 52-week period, the fund has traded between $28.05 and $34.47.
The ETF has a beta of 1.12 and standard deviation of 22.87% for the trailing three-year period. With about 391 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 Small-Cap ETF (IJR - Free Report) tracks S&P SmallCap 600 Index. IShares Russell 2000 ETF has $49.31 billion in assets, iShares Core S&P Small-Cap ETF has $64.92 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.