Making its debut on 02/23/2016, smart beta exchange traded fund Janus Henderson Small/Mid Cap Growth Alpha ETF (JSMD) provides investors broad exposure to the Style Box - Small Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Janus Henderson. JSMD has been able to amass assets over $359.11 million, making it one of the average sized ETFs in the Style Box - Small Cap Growth. This particular fund seeks to match the performance of the Janus Small/Mid Cap Growth Alpha Index before fees and expenses.
The Janus Henderson Small/Mid Cap Growth Alpha Index selects small- and medium-sized capitalization stocks that are poised for smart growth by evaluating each company performance in three critical areas: growth, profitability, and capital efficiency.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.30%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.44%.
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.
JSMD's heaviest allocation is in the Industrials sector, which is about 25% of the portfolio. Its Information Technology and Healthcare round out the top three.
When you look at individual holdings, Medpace Holdings Inc. (MEDP) accounts for about 3.93% of the fund's total assets, followed by Charles River Laboratories International Inc. (CRL) and Shockwave Medical Inc (SWAV).
JSMD's top 10 holdings account for about 27.43% of its total assets under management.
Performance and Risk
The ETF has added roughly 4.10% so far this year and is up about 22.14% in the last one year (as of 05/15/2024). In the past 52-week period, it has traded between $54.25 and $69.92.
The fund has a beta of 1.15 and standard deviation of 23.01% for the trailing three-year period. With about 256 holdings, it effectively diversifies company-specific risk.
Alternatives
Janus Henderson Small/Mid Cap Growth Alpha ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Growth ETF (IWO) tracks Russell 2000 Growth Index and the Vanguard Small-Cap Growth ETF (VBK) tracks CRSP U.S. Small Cap Growth Index. IShares Russell 2000 Growth ETF has $10.97 billion in assets, Vanguard Small-Cap Growth ETF has $17.02 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Growth.
Bottom Line
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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Janus Henderson Small/Mid Cap Growth Alpha ETF (JSMD): ETF Research Reports
Charles River Laboratories International, Inc. (CRL) : Free Stock Analysis Report
iShares Russell 2000 Growth ETF (IWO): ETF Research Reports
Medpace Holdings, Inc. (MEDP) : Free Stock Analysis Report
Vanguard Small-Cap Growth ETF (VBK): ETF Research Reports
ShockWave Medical, Inc. (SWAV) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
