Launched on 02/23/2016, the Janus Henderson Small/Mid Cap Growth Alpha ETF (JSMD) is a smart beta exchange traded fund offering broad exposure to the Style Box - Small Cap Growth category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is sponsored by Janus Henderson. It has amassed assets over $412.72 million, making it one of the average sized ETFs in the Style Box - Small Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Janus Small/Mid Cap Growth Alpha Index.

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 JSMD are 0.30%, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 0.34%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

JSMD's heaviest allocation is in the Industrials sector, which is about 26.40% of the portfolio. Its Information Technology and Healthcare round out the top three.

Taking into account individual holdings, Applovin Corp. Class A (APP) accounts for about 5.08% of the fund's total assets, followed by Incyte Corporation (INCY) and Heico Corporation (HEI).

The top 10 holdings account for about 24.95% of total assets under management.

Performance and Risk

The ETF return is roughly 17.39% and it's up approximately 30.60% so far this year and in the past one year (as of 11/19/2024), respectively. JSMD has traded between $59.24 and $81.09 during this last 52-week period.

The fund has a beta of 1.12 and standard deviation of 23.66% for the trailing three-year period. With about 258 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 $12.64 billion in assets, Vanguard Small-Cap Growth ETF has $19.14 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

Incyte Corporation (INCY) : Free Stock Analysis Report

AppLovin Corporation (APP) : Free Stock Analysis Report

Heico Corporation (HEI) : Free Stock Analysis Report

iShares Russell 2000 Growth ETF (IWO): ETF Research Reports

Vanguard Small-Cap Growth ETF (VBK): ETF Research Reports

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