John Hancock Multifactor Mid Cap ETF is a light-touch multifactor strategy whose broad reach and tilts toward the value, profitability, and small-size factors should give it an edge on the Russell Mid Cap Index. 
The John Hancock Dimensional Mid Cap Index, which this fund fully replicates, absorbs the broad mid-cap market and bends toward stocks that are relatively cheap, profitable, and small. Each of those risk factors has historically been tied to market-beating performance and should help the fund pull ahead of the Russell Mid Cap Index, its Morningstar Category benchmark.
This fund sports mild exposure to the factors that it targets. While it trades at cheaper valuations and boasts stronger profitability metrics than its category index, it doesn’t look much different than it. At the end of September 2023, roughly 65% of the portfolio overlapped with the Russell Mid Cap. The fund consequently registered just a 1.8% tracking error relative to that index over the past three years—a testament to its light-touch strategy and a good indication of what investors can expect. 
Portfolio construction involves tradeoffs, and the diversification this fund sports in exchange for its softer factor tilts is a worthy one. With the top 10 stocks representing 4.5% of the portfolio, firm-specific risk is not a concern. Neither is sector risk. The fund measures stocks’ value, profitability, and size on a sector-relative basis, so its composition mirrors that of the Russell Mid Cap Index. By controlling for individual position sizes and sector exposures, the fund ensures that its intended factors drive performance instead of incidental bets on companies or sectors. 
The factors this fund targets tend to pay off at different times, adding to the balance in this portfolio. For instance, value has historically thrived when quality wavers. Tilting toward stocks that score well in both should translate into a smoother performance trajectory and keep this fund competitive across a range of market backdrops.

Analyst Rating

A touch better than the broad mid-cap market.

Analyst

Ryan Jackson

United Rentals

Ameriprise Financial

Hartford Financial Services Group

Lennar

AMETEK

Diamondback Energy

PulteGroup

Fastenal

Small-scale bets on the value, profitability, and small-size factors should give this fund a modest edge over the broad mid-cap market. Its broad reach keeps sector- and firm-specific risks under wraps. It earns an Above Average Process Pillar rating.

Above Average

Process

This fund is subadvised by a portfolio management team at Dimensional Fund Advisors, the same firm that constructs this benchmark. The team's global trading capabilities and focus on mitigating transaction costs support an Above Average People Pillar rating.
Joe Hohn, Andres Torres, Casey Baum, and Rita Chen are the named managers of this fund. Hohn has led the effort on this fund since 2018. Torres joined the roster in early 2021. In September 2022, Baum and Chen took the place of Joel Schneider, who moved to a handful of Dimensional's international strategies.
Dimensional deploys a team-based approach that renders Torres, Baum, and Chen—and others not named on this fund—capable of stepping in for Hohn. This flat management structure eases concerns over any manager departures.
Limiting transaction costs is the team's priority. Managers may spread trades over a few days around the rebalance date to reduce market impact. A global network of trading desks helps the team implement this strategy efficiently.
This team is subject to risk oversight committees at both Dimensional and John Hancock.

People

Manulife Financial Corp has revamped its wealth- and asset-management business off the long-term strength of its successful U.S. unit, meriting an Above Average Parent rating. 

One of Canada’s Big Three life insurance companies, Manulife operates primarily in Canada, the United States, and Asia, with the bulk of assets in the U.S. The firm united its investment and wealth-management groups into a single, global segment in 2017 and 2018 and showcased it as a high-potential business. Since then, the group has restructured to mix three regional heads—U.S. & Europe, Asia, and Canada—with three global leaders segmented by channel: Retail, Retirement, and Institutional.

Manulife has entrusted this initiative to key individuals from its U.S. outfit, John Hancock Investments. For instance, Andy Arnott recently shifted from focusing on the U.S. and European unit to head up the firm’s global retail efforts. Leadership hopes this structure will allow it to leverage successful initiatives in its distinct regional markets.

John Hancock’s manager research team has long prioritized best-in-class managers regardless of firm affiliation. While much of the firm’s fixed-income strategies are run by Manulife teams globally, external managers dominate the firm’s equity lineup in the U.S. In its home market of Canada, Manulife’s internal teams, which boast strengths and weaknesses, manage most of the firm’s offerings, though the firm also has a strategic partnership with investment stalwart Mawer.

Parent

John Hancock Multifactor Mid Cap ETF

JHMM tracks an index of US firms ranked 200-950 by size, weighted by multiple factors relative to their sector peers.

The John Hancock Multifactor Mid Cap ETF (JHMM) made its debut on 09/28/2015, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Mid Cap Blend category of the market.

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