Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the Janus Henderson Small/Mid Cap Growth Alpha ETF (JSMD), a passively managed exchange traded fund launched on 02/23/2016.

The fund is sponsored by Janus Henderson. It has amassed assets over $386.30 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.

Why Small Cap Growth

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Also, growth stocks are a type of equity that carries more risk compared to others. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.30%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.36%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 26.70% of the portfolio. Healthcare and Information Technology round out the top three.

Looking at individual holdings, Applovin Corp. Class A (APP) accounts for about 4.39% of total assets, followed by Heico Corporation (HEI) and Incyte Corporation (INCY).

The top 10 holdings account for about 24.75% of total assets under management.

Performance and Risk

JSMD 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.

The ETF has added roughly 10.44% so far this year and was up about 26.29% in the last one year (as of 11/05/2024). In the past 52-week period, it has traded between $55.58 and $73.80.

The ETF has a beta of 1.12 and standard deviation of 23.42% 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 carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JSMD is a reasonable option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $12.09 billion in assets, Vanguard Small-Cap Growth ETF has $18.21 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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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