Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the John Hancock Multifactor Small Cap ETF (JHSC), a passively managed exchange traded fund launched on 11/08/2017.
The fund is sponsored by John Hancock. It has amassed assets over $352.35 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
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.
Annual operating expenses for this ETF are 0.42%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.19%.
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.
This ETF has heaviest allocation to the Industrials sector–about 21.10% of the portfolio. Financials and Information Technology round out the top three.
Looking at individual holdings, Super Micro Computer Inc (SMCI) accounts for about 0.84% of total assets, followed by Topbuild Corp (BLD) and National Instruments Corp (NATI).
The top 10 holdings account for about 5.62% of total assets under management.
Performance and Risk
JHSC seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX before fees and expenses. 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.
The ETF has added about 8.10% so far this year and is up roughly 2.96% in the last one year (as of 11/23/2023). In the past 52-week period, it has traded between $29.77 and $34.98.
The ETF has a beta of 1.13 and standard deviation of 20.78% for the trailing three-year period. With about 398 holdings, it effectively diversifies company-specific risk.
Alternatives
John Hancock Multifactor Small Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JHSC is a reasonable option for those seeking exposure to the Style Box – Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $55.33 billion in assets, iShares Core S&P Small-Cap ETF has $67.50 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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John Hancock Multifactor Small Cap ETF (JHSC): ETF Research Reports
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
TopBuild Corp. (BLD) : Free Stock Analysis Report
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
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