Is John Hancock Multifactor Small Cap ETF (JHSC) a Strong ETF Right Now?

The John Hancock Multifactor Small Cap ETF (JHSC) was launched on 11/08/2017, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Small 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.

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.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

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.

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

The fund is managed by John Hancock, and has been able to amass over $699.5 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX.

The John Hancock Dimensional Small Cap Index is designed to comprise a subset of securities in the U.S. Universe issued by companies whose market capitalizations are smaller than the 750th largest U.S. company but excluding the smallest 4% of U.S. companies at the time of reconstitution.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.42% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.03%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

JHSC's heaviest allocation is in the Industrials sector, which is about 21.9% of the portfolio. Its Financials and Information Technology round out the top three.

Taking into account individual holdings, Sandisk Corp (SNDK) accounts for about 2.1% of the fund's total assets, followed by Revolution Medicines Inc (RVMD) and Mks Inc (MKSI).

Its top 10 holdings account for approximately 7.61% of JHSC's total assets under management.

Performance and Risk

So far this year, JHSC return is roughly 9.07%, and is up about 17.27% in the last one year (as of 02/25/2026). During this past 52-week period, the fund has traded between $32.47 and $46.28.

The ETF has a beta of 1.03 and standard deviation of 18.87% for the trailing three-year period. With about 514 holdings, it effectively diversifies company-specific risk .

Alternatives

John Hancock Multifactor Small Cap ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

iShares Russell 2000 ETF (IWM) tracks Russell 2000 Index and the iShares Core S&P Small-Cap ETF (IJR) tracks S&P SmallCap 600 Index. iShares Russell 2000 ETF has $75.3 billion in assets, iShares Core S&P Small-Cap ETF has $96.09 billion. IWM has an expense ratio of 0.19% and IJR changes 0.06%.

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 - Small Cap Blend

Bottom Line

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research