John Hancock Investments has reduced the expense ratios for its nine multifactor US sector ETFs sub-advised by smart beta specialist Dimensional Fund Advisors.
Andrew G. Arnott, President and CEO of John Hancock Investments.
The fee reductions, which saw the funds’ net expense ratios cut by ten basis points from 0.50% to 0.40%, became effective on 1 January 2019.
According to John Hancock, the cost reductions reflect a combination of direct management fee cuts, contractual expense caps, and new breakpoints.
“Providing shareholder value is intrinsic to John Hancock Investment’s multimanager model,” said Andrew Arnott, President and Chief Executive Officer, John Hancock Investments. “We are keenly aware of the landscape and how competitive fees, in addition to performance, can impact a portfolio. We are pleased to offer to shareholders our due diligence process, combined with the investment prowess of our subadvisors, at a reduced fee.”
While the ETFs are passively managed, the underlying indices embody aspects of Dimensional’s multifactor 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 list of John Hancock multifactor sector ETFs is outlined below:
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)
Collectively, the suite houses around $330 million in assets under management. JHMF, JHMH, and JHMT are the largest in the range with around $55m AUM each.