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MARKETS LIVE BLOG:

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Is John Hancock Multifactor Mid Cap ETF (JHMM) a Strong ETF Right Now?

Zacks Equity Research
·4 min read

The John Hancock Multifactor Mid Cap ETF (JHMM) made its debut on 09/28/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Blend category of the market.

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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

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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.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

Managed by John Hancock, JHMM has amassed assets over $2.45 billion, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. JHMM seeks to match the performance of the John Hancock Dimensional Mid Cap Index before fees and expenses.

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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.41% for JHMM, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 0.81%.

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.

This ETF has heaviest allocation in the Information Technology sector - about 16.40% of the portfolio. Industrials and Financials round out the top three.

When you look at individual holdings, Fifth Third Bancorp (FITB) accounts for about 0.47% of the fund's total assets, followed by Parker Hannifin Corp (PH) and Nucor Corp (NUE).

The top 10 holdings account for about 4.3% of total assets under management.

Performance and Risk

Year-to-date, the John Hancock Multifactor Mid Cap ETF has lost about -10.63% so far, and is down about -3.46% over the last 12 months (as of 05/04/2022). JHMM has traded between $48.75 and $56.63 in this past 52-week period.

The fund has a beta of 1.08 and standard deviation of 25.66% for the trailing three-year period, which makes JHMM a medium risk choice in this particular space. With about 667 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 $50.79 billion in assets, iShares Core S&P MidCap ETF has $62.21 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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John Hancock Multifactor Mid Cap ETF (JHMM): ETF Research Reports
 
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
Nucor Corporation (NUE) : Free Stock Analysis Report
 
ParkerHannifin Corporation (PH) : 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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