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A smart beta exchange traded fund, the John Hancock Multifactor Mid Cap ETF (JHMM) debuted on 09/28/2015, and offers 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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
JHMM is managed by John Hancock, and this fund has amassed over $2.38 billion, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, 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 this ETF, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.75%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For JHMM, it has heaviest allocation in the Information Technology sector --about 19.30% of the portfolio --while Industrials and Healthcare round out the top three.
When you look at individual holdings, Marvell Technology Inc (MRVL) accounts for about 0.53% of the fund's total assets, followed by Parker Hannifin Corp (PH) and Skyworks Solutions Inc (SWKS).
JHMM's top 10 holdings account for about 4.13% of its total assets under management.
Performance and Risk
Year-to-date, the John Hancock Multifactor Mid Cap ETF has gained about 20.19% so far, and is up about 44.12% over the last 12 months (as of 09/13/2021). JHMM has traded between $36.29 and $54.37 in this past 52-week period.
JHMM has a beta of 1.13 and standard deviation of 25.26% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 670 holdings, it effectively diversifies company-specific risk.
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 MidCap ETF (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P MidCap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $51.55 billion in assets, iShares Core S&P MidCap ETF has $63.02 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.
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 Mid Cap ETF (JHMM): ETF Research Reports
ParkerHannifin Corporation (PH) : Free Stock Analysis Report
Skyworks Solutions, Inc. (SWKS) : Free Stock Analysis Report
Marvell Technology, Inc. (MRVL) : Free Stock Analysis Report
iShares Core S&P MidCap ETF (IJH): ETF Research Reports
Vanguard MidCap ETF (VO): ETF Research Reports
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