Making its debut on 02/23/2016, smart beta exchange traded fund Janus Henderson Small Cap Growth Alpha ETF (JSML) 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Janus Henderson, and has been able to amass over $367.94 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Growth. Before fees and expenses, this particular fund seeks to match the performance of the Janus Small Cap Growth Alpha Index.
The Janus Henderson Small Cap Growth Alpha Index selects small-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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.30%.
The fund has a 12-month trailing dividend yield of 0.34%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For JSML, it has heaviest allocation in the Healthcare sector --about 28.2% of the portfolio --while Information Technology and Industrials round out the top three.
When you look at individual holdings, Cactus Inc. Class A (WHD) accounts for about 2.23% of the fund's total assets, followed by Trinet Group Inc. (TNET) and Ryman Hospitality Properties Inc. (RHP).
Its top 10 holdings account for approximately 17.72% of JSML's total assets under management.
Performance and Risk
The ETF has gained about 20.74% so far this year and is up roughly 21.65% in the last one year (as of 09/08/2026). In the past 52-week period, it has traded between $67.22 and $93.18
The ETF has a beta of 1.28 and standard deviation of 21.82% for the trailing three-year period. With about 122 holdings, it effectively diversifies company-specific risk .
Alternatives
Janus Henderson Small Cap Growth Alpha ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
iShares Russell 2000 Growth ETF (IWO) tracks Russell 2000 Growth Index and the Vanguard Morningstar Small-Cap Growth ETF (VBK) tracks CRSP U.S. Small Cap Growth Index. iShares Russell 2000 Growth ETF has $14.68 billion in assets, Vanguard Morningstar Small-Cap Growth ETF has $23.66 billion. IWO has an expense ratio of 0.24% and VBK changes 0.05%.
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 Cap Growth Alpha ETF (JSML): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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