The John Hancock Multifactor Small Cap ETF: A New Player in the Small Cap Blend Segment
On November 8, 2017, the financial world welcomed a new exchange-traded fund (ETF) into the fold: the John Hancock Multifactor Small Cap ETF, ticker symbol JHSC. This ETF is a passive investment vehicle designed to provide broad exposure to the Small Cap Blend segment of the US equity market.
What Makes JHSC Unique?
First, it’s essential to understand what sets JHSC apart from other small cap blend ETFs. The fund employs a multifactor approach, which means it considers several factors—not just market capitalization and price-to-earnings ratios—to select its holdings. These factors include value, momentum, size, and quality.
Value Factor
- Identifies stocks that are undervalued relative to their fundamentals
- This strategy can help the fund outperform when the market experiences a value rotation
Momentum Factor
- Selects stocks with positive price trends
- This strategy can help the fund capture gains from stocks that are in an uptrend
Size Factor
- Focuses on small cap stocks
- This strategy can help the fund provide diversification benefits and potential for higher returns
Quality Factor
- Selects stocks with strong fundamentals, such as high return on equity and low debt
- This strategy can help the fund minimize risk and provide more stable returns
Impact on Individual Investors
As an individual investor, JHSC can offer you several benefits. First, its multifactor approach can help you achieve more diversified exposure to the small cap blend segment of the US equity market. Additionally, its focus on value, momentum, size, and quality can help you capture gains from various market conditions.
Impact on the World
On a larger scale, JHSC’s launch could have several implications for the investment world. Its multifactor approach could lead to increased competition among ETF providers, as more investors seek diversified exposure to various market segments. Additionally, JHSC’s success could encourage other asset managers to adopt similar strategies, potentially leading to a shift in the way small cap blend ETFs are constructed.
Conclusion
In conclusion, the John Hancock Multifactor Small Cap ETF represents an exciting new addition to the world of small cap blend ETFs. Its multifactor approach, which considers value, momentum, size, and quality, can help investors achieve more diversified exposure to the small cap blend segment of the US equity market while potentially capturing gains from various market conditions. The ETF’s impact on the investment world remains to be seen, but its launch could lead to increased competition and potential shifts in the way small cap blend ETFs are constructed.
So, whether you’re an individual investor looking to add some diversity to your portfolio or a financial professional seeking to stay ahead of the curve, keep an eye on JHSC as it navigates its first years in the market.
