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Should John Hancock Multifactor Large Cap ETF (JHML) Be on Your Investing Radar?

Zacks Equity Research
Though rising yields have dampened the appeal for dividend investing, a niche corner of this space, comprising stocks that boast dividend growth, is still in vogue.

Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the John Hancock Multifactor Large Cap ETF (JHML), a passively managed exchange traded fund launched on 09/28/2015.

The fund is sponsored by John Hancock. It has amassed assets over $474.74 M, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

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 counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.37%.

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 Information Technology sector--about 23.10% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 3.22% of total assets, followed by Microsoft Corp (MSFT) and Amazon.com Inc (AMZN).

The top 10 holdings account for about 12.33% of total assets under management.

Performance and Risk

JHML seeks to match the performance of the John Hancock Dimensional Large Cap Index before fees and expenses. 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.

The ETF has gained about 8.26% so far this year and was up about 17.99% in the last one year (as of 09/05/2018). In the past 52-week period, it has traded between $31.94 and $37.65.

The ETF has a beta of 1.05 and standard deviation of 11.81% for the trailing three-year period, making it a medium risk choice in the space. With about 785 holdings, it effectively diversifies company-specific risk.

Alternatives

John Hancock Multifactor Large 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, JHML is a reasonable option for those seeking exposure to the Large Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $164.21 B in assets, SPDR S&P 500 ETF has $279.21 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.

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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