Should John Hancock Multifactor Small Cap ETF (JHSC) Be on Your Investing Radar?

The John Hancock Multifactor Small Cap ETF (JHSC) was launched on 11/08/2017, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by John Hancock. It has amassed assets over $528.60 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

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.

Annual operating expenses for this ETF are 0.42%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.99%.

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 to the Industrials sector--about 21.90% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Planet Fitness Inc Cl A (PLNT) accounts for about 0.54% of total assets, followed by Agree Realty Corp (ADC) and Commvault Systems Inc (CVLT).

The top 10 holdings account for about 5.08% of total assets under management.

Performance and Risk

JHSC seeks to match the performance of the JOHN HANCOCK DIMENSIONAL SMALL CAP INDEX before fees and expenses. 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.

The ETF has lost about -2.81% so far this year and is up about 5.85% in the last one year (as of 06/12/2025). In the past 52-week period, it has traded between $32.47 and $43.65.

The ETF has a beta of 1.03 and standard deviation of 20.69% for the trailing three-year period. With about 466 holdings, it effectively diversifies company-specific risk.

Alternatives

John Hancock Multifactor Small Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JHSC is a good option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $62.66 billion in assets, iShares Core S&P Small-Cap ETF has $79.12 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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

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