Making its debut on 09/28/2015, smart beta exchange traded fund John Hancock Multifactor Mid Cap ETF (JHMM) provides investors broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
JHMM is managed by John Hancock, and this fund has amassed over $4.05 billion, which makes it one of the larger ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, JHMM seeks to match the performance of the John Hancock Dimensional Mid Cap Index.
The John Hancock Dimensional Mid Cap Index comprises of a subset of securities in the U.S. Universe issued by companies whose market capitalizations are between the 200th and 951st largest U.S. company.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.42% for JHMM, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1%.
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.
For JHMM, it has heaviest allocation in the Industrials sector --about 20.50% of the portfolio --while Financials and Information Technology round out the top three.
Looking at individual holdings, United Rentals Inc (URI) accounts for about 0.66% of total assets, followed by Ameriprise Financial Inc (AMP) and Vistra Corp (VST).
The top 10 holdings account for about 4.61% of total assets under management.
Performance and Risk
The ETF return is roughly 15.99% and was up about 35.50% so far this year and in the past one year (as of 10/22/2024), respectively. JHMM has traded between $44.18 and $61.39 during this last 52-week period.
JHMM has a beta of 1.08 and standard deviation of 18.93% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 667 holdings, it effectively diversifies company-specific risk.
Alternatives
John Hancock Multifactor Mid Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $71.09 billion in assets, iShares Core S&P Mid-Cap ETF has $93 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
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 - Mid 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.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.
Get it free >>John Hancock Multifactor Mid Cap ETF (JHMM): ETF Research Reports
Ameriprise Financial, Inc. (AMP) : Free Stock Analysis Report
United Rentals, Inc. (URI) : Free Stock Analysis Report
iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports
Vanguard Mid-Cap ETF (VO): ETF Research Reports
Vistra Corp. (VST) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
