John Hancock Investments has expanded its suite of multifactor exchange-traded funds with the launch of a new fund offering investors access to international equities exposure. The John Hancock Multifactor Developed International ETF (NYSE: JHMD) harnesses Dimensional Fund Advisors’ smart beta research in an effort to outperform similar market capitalization weighted benchmarks.
Andrew G. Arnott, President and CEO of John Hancock Investments.
Dimensional is considered a pioneer in the smart beta space, having developed its approach over 30 years of market research.
Andrew G. Arnott, President and CEO of John Hancock Investments, commented: “Adding an ETF focused on international investing is a logical extension of our product line, and we are pleased to be able to bring Dimensional’s proven multifactor approach to investors seeking to invest in international markets.”
John Hancock and Dimensional have collaborated to offer investment strategies, through individual John Hancock mutual funds as well as asset allocation portfolios, for over a decade. They are also well acquainted providing such strategies through an ETF wrapper, having teamed up on 12 ETF launches over the past 18 months.
Seeking to capture the factors that drive higher expected returns, Dimensional’s approach favours firms with smaller market capitalisations, lower relative prices, higher profitability, and positive price momentum. The lowest 30% of momentum stocks are generally not eligible for the final index.
By tracking the John Hancock Dimensional Developed International Index, the ETF targets a wide range of developed-market stocks outside of North America. As of 19 December 2016 the ETF has over 600 constituents and significant exposure to Japan (25.9%), the UK (18.6%), Germany (9.4%), France (9.0%) and Switzerland (8.3%). The fund’s largest sector exposures are to financials (18.8%), industrials (16.1%), consumer discretionary (15.9%), materials (10.7%) and healthcare (8.1%).
By moving away from a price-related to a fundamental weighting system, the ETF may potentially improve diversification across its constituents; the largest holding in the fund is Toyota with a weight of just 2.0%.
“The beauty of Dimensional’s philosophy is that it is straightforward and disciplined in its approach, yet so thoughtful and innovative in its implementation,” said Steve L. Deroian, Head of ETF Strategy at John Hancock Investments. “They are truly an exceptional firm to be able to partner with to deliver solutions to our clients.”
The fund’s total expense ratio (TER) is 0.45% due to a contractual fee waiver in place until 31 August 2018. The gross expense ratio is 0.68%.
John Hancock’s previous smart beta ETF launches, in collaboration with Dimensional, include US large- and mid-cap portfolios as well as a range of nine US sector-specific offerings. Collectively the funds have amassed over $630m in assets under management. The full suite is listed on the NYSE.
John Hancock Multifactor Large Cap ETF (JHML)
John Hancock Multifactor Mid Cap ETF (JHMM)
John Hancock Multifactor Consumer Discretionary ETF (JHMC)
John Hancock Multifactor Financials ETF (JHMF)
John Hancock Multifactor Healthcare ETF (JHMH)
John Hancock Multifactor Technology ETF (JHMT)
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)
John Hancock Multifactor Developed International ETF (JHMD)