John Hancock adds US media & comms ETF to multifactor sector suite

Mar 15th, 2019 | By | Category: Equities

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John Hancock Investments has completed its suite of multifactor US sector ETFs with the launch of the John Hancock Multifactor Media and Communications ETF (JHCS US) on NYSE Arca.

John Hancock Multifactor ETFs

There are now ten funds within John Hancock’s suite of multifactor US sector ETFs created in partnership with Dimensional Fund Advisors.

The fund is linked to the John Hancock Dimensional Media and Communications Index, designed by smart beta specialist Dimensional Fund Advisors.

It provides exposure to equities from across the market cap spectrum that are classified as operating within the media and communications sector of the US economy.

Constituents are selected and weighted based on Dimensional’s multifactor process.

The addition to the suite mirrors recent changes – the introduction of the new communications sector – to the Global Industry Classification Standard (GICS) implemented by S&P Dow Jones Indices and MSCI..

The sector reflects the transformed telecommunications services sector and is designed to include those companies involved more widely and directly in the new communication era, including select companies from the information technology and consumer discretionary sectors.

While the sector currently contains just 26 stocks from the S&P 500, its constituents include some of the largest and arguably most innovative companies in the world with household names such as Twitter, Google (traded as Alphabet), Facebook, Netflix, and Disney all making the list.

“The new John Hancock Multifactor Media and Communications ETF gives investors specific exposure to this new sector that represents an important segment of the overall market,” said Andrew G. Arnott, President, and CEO of John Hancock Investments. “Our partnership with Dimensional allows the opportunity to build portfolios that include these transformative companies with the additional benefit of Dimensional’s time-tested multifactor approach.”

“Our goal is to continue to launch products that meet the needs and expectations of our investors,” added Steve Deroian, US Head of ETF Product at John Hancock Investments. “From our first ETF launch with Dimensional over three years ago, we’ve focused on offering clients the factor expertise for which Dimensional is known, and the John Hancock Multifactor Media and Communications ETF completes our sector ETF suite available to investors.”

Multifactor selection process

While the John Hancock multifactor US sector ETFs are passively managed, the underlying indices embody aspects of Dimensional’s investment philosophy and approach to portfolio construction, along with rules aimed at minimizing unnecessary or costly turnover. The factors have been chosen based on sound financial theory and a historical record of outperforming market capitalization-based benchmarks.

Each index sorts potential constituents by their characteristics of market capitalization (size), relative price (value), profitability (quality) and 11-month total return (momentum). Stocks with low relative price, high profitability and smaller market cap are favoured through each index’s weighting methodology. The lowest 30% of momentum stocks are generally not eligible for the index.

The other funds in the sector suite are as follows:

John Hancock Multifactor Consumer Discretionary ETF (JHMC US)
John Hancock Multifactor Consumer Staples ETF (JHMS US)
John Hancock Multifactor Energy ETF (JHME US)
John Hancock Multifactor Financials ETF (JHMF US)
John Hancock Multifactor Healthcare ETF (JHMH US)
John Hancock Multifactor Industrials ETF (JHMI US)
John Hancock Multifactor Materials ETF (JHMA US)
John Hancock Multifactor Technology ETF (JHMT US)
John Hancock Multifactor Utilities ETF (JHMU US)

Each ETF comes with an expense ratio of 0.40%, following a fee reduction from 0.50% applied at the start of the year.

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