Designed to provide broad exposure to the Style Box - Mid Cap Blend category of the market, the John Hancock Multifactor Mid Cap ETF (JHMM) is a smart beta exchange traded fund launched on 09/28/2015.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by John Hancock. It has amassed assets over $2.20 billion, making it one of the average sized 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
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 on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.91%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
This ETF has heaviest allocation in the Information Technology sector - about 18.50% of the portfolio. Industrials and Consumer Discretionary round out the top three.
When you look at individual holdings, Parker Hannifin Corp (NYSE:PH) accounts for about 0.50% of the fund's total assets, followed by Skyworks Solutions Inc (NASDAQ:SWKS) and United Rentals Inc (NYSE:URI).
JHMM's top 10 holdings account for about 3.22% of its total assets under management.
Performance and Risk
Year-to-date, the John Hancock Multifactor Mid Cap ETF has added roughly 16.78% so far, and it's up approximately 49.47% over the last 12 months (as of 05/28/2021). JHMM has traded between $34.02 and $52.22 in this past 52-week period.
The ETF has a beta of 1.14 and standard deviation of 25.13% for the trailing three-year period, making it a medium risk choice in the space. With about 673 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 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 $48.21 billion in assets, iShares Core S&P MidCap ETF has $64.45 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.
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JH-M-F MC (JHMM): ETF Research Reports
Skyworks Solutions, Inc. (SWKS): Free Stock Analysis Report
ParkerHannifin Corporation (PH): Free Stock Analysis Report
United Rentals, Inc. (URI): Free Stock Analysis Report
ISHARS-SP MID (IJH): ETF Research Reports
VIPERS-MID CAP (VO): ETF Research Reports
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