Launched on 09/28/2015, the John Hancock Multifactor Large Cap ETF (JHML) is a smart beta exchange traded fund offering broad exposure to the Style Box – Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
Managed by John Hancock, JHML has amassed assets over $695.77 million, making it one of the larger ETFs in the Style Box – Large Cap Blend. JHML, before fees and expenses, seeks to match the performance of the John Hancock Dimensional Large Cap Index.
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.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
Operating expenses on an annual basis are 0.29% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.43%.
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.
JHML’s heaviest allocation is in the Information Technology sector, which is about 23.70% of the portfolio. Its Healthcare and Financials round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 3.37% of total assets, followed by Apple Inc (AAPL) and Amazon.com Inc (AMZN).
The top 10 holdings account for about 14.43% of total assets under management.
Performance and Risk
Year-to-date, the John Hancock Multifactor Large Cap ETF has gained about 13.14% so far, and was up about 55.20% over the last 12 months (as of 04/23/2021). JHML has traded between $34.81 and $53.28 in this past 52-week period.
JHML has a beta of 1.03 and standard deviation of 23.02% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 785 holdings, it effectively diversifies company-specific risk.
Alternatives
John Hancock Multifactor Large Cap ETF is a reasonable option for investors seeking to outperform the Style Box – Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $273.73 billion in assets, SPDR S&P 500 ETF has $360.42 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
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 – Large 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
.
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