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

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A smart beta exchange traded fund, the John Hancock Multifactor Large Cap ETF (JHML - Free Report) debuted on 09/28/2015, and offers broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

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.

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.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

Managed by John Hancock, JHML has amassed assets over $746.99 million, making it one of the larger ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the John Hancock Dimensional Large Cap Index.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 1.48%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

This ETF has heaviest allocation in the Information Technology sector - about 23.30% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 4.61% of total assets, followed by Apple Inc (AAPL - Free Report) and Amazon.com Inc (AMZN - Free Report) .

Performance and Risk

So far this year, JHML has added about 8.90%, and is up roughly 16.65% in the last one year (as of 10/10/2023). During this past 52-week period, the fund has traded between $45.55 and $56.65.

JHML has a beta of 1.01 and standard deviation of 17.30% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 776 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 $346.33 billion in assets, SPDR S&P 500 ETF has $402.97 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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