Should John Hancock Multifactor Small Cap ETF (JHSC) Be on Your Investing Radar?

Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the John Hancock Multifactor Small Cap ETF (JHSC) is a passively managed exchange traded fund launched on 11/08/2017.

The fund is sponsored by John Hancock. It has amassed assets over $428.74 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

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

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%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 0.95%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 21.50% of the portfolio. Financials and Information Technology round out the top three.

Looking at individual holdings, Crocs Inc (CROX) accounts for about 0.66% of total assets, followed by Nov Inc (NOV) and Cognex Corp (CGNX).

The top 10 holdings account for about 6.01% 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 roughly 2.57% so far this year and was up about 22.10% in the last one year (as of 05/27/2024). In the past 52-week period, it has traded between $29.77 and $38.52.

The ETF has a beta of 1.13 and standard deviation of 20.28% for the trailing three-year period. With about 271 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 good 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 $60.51 billion in assets, iShares Core S&P Small-Cap ETF has $78.87 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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

NOV Inc. (NOV) : Free Stock Analysis Report

Cognex Corporation (CGNX) : Free Stock Analysis Report

Crocs, Inc. (CROX) : Free Stock Analysis Report

iShares Russell 2000 ETF (IWM): ETF Research Reports

iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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