Back to top

Image: Bigstock

Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?

Read MoreHide Full Article

Making its debut on 11/08/2017, smart beta exchange traded fund John Hancock Multifactor Small Cap ETF (JHSC - Free Report) provides investors broad exposure to the Style Box - Small Cap Blend category of the market.

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.

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.

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.

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

The fund is managed by John Hancock. JHSC has been able to amass assets over $524.43 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.42% for this ETF, which makes it on par with most peer products in the space.

JHSC's 12-month trailing dividend yield is 0.99%.

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.

JHSC's heaviest allocation is in the Industrials sector, which is about 22.50% of the portfolio. Its Financials and Consumer Discretionary round out the top three.

When you look at individual holdings, Planet Fitness Inc Cl A (PLNT - Free Report) accounts for about 0.54% of the fund's total assets, followed by Agree Realty Corp (ADC - Free Report) and Commvault Systems Inc (CVLT - Free Report) .

The top 10 holdings account for about 5.08% of total assets under management.

Performance and Risk

So far this year, JHSC has lost about -3.10%, and it's up approximately 4.77% in the last one year (as of 06/09/2025). During this past 52-week period, the fund has traded between $32.47 and $43.65.

JHSC has a beta of 1.03 and standard deviation of 20.79% for the trailing three-year period. With about 466 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 $62.92 billion in assets, iShares Core S&P Small-Cap ETF has $78.18 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.

Published in