John Hancock Investments, a Boston-based asset manager who launched its first raft of exchange-traded funds in September last year, has expanded its product line-up with five new sector multifactor ETFs.
Andrew G. Arnott, president and CEO of John Hancock Investments.
The new additions build upon the firm’s existing partnership with Dimensional Fund Advisors, a smart beta pioneer. The two began their collaboration in 2006, offering strategies as both individual John Hancock mutual funds and through John Hancock asset allocation portfolios.
While the ETFs are passively managed, the indices will 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 historic record of outperforming market capitalisation-based benchmarks.
Each index sorts potential constituents by their characteristics of market capitalisation (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.
“We’re pleased to be able to bring Dimensional’s proven multifactor approach to a broader set of sector ETFs,” said Andrew G. Arnott, president and CEO of John Hancock Investments. “Investors are increasingly looking for a better way to achieve equity market beta than relying solely on traditional capitalization-weighted indices, and our line-up of John Hancock Multifactor ETFs now provides a broad range of tools for doing just that.”
Dimensional started applying the concept of multifactor investing more than 30 years ago, leading to a research-driven understanding of the factors that shape expected returns.
The new funds have been listed on the NYSE Arca and include:
John Hancock Multifactor Consumer Staples ETF (JHMS)
John Hancock Multifactor Energy ETF (JHME)
John Hancock Multifactor Industrials ETF (JHMI)
John Hancock Multifactor Materials ETF (JHMA)
John Hancock Multifactor Utilities ETF (JHMU)
A total expense ratio of 0.50% applies to each fund.