Launched on 02/23/2016, the Janus Henderson Small Cap Growth Alpha ETF (JSML) 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.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.

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

Because the fund has amassed over $250.15 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Growth. JSML is managed by Janus Henderson. Before fees and expenses, JSML 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

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

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

JSML's 12-month trailing dividend yield is 1.19%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

For JSML, it has heaviest allocation in the Industrials sector --about 29.90% of the portfolio --while Healthcare and Information Technology round out the top three.

When you look at individual holdings, Corcept Therapeutics Incorporated. (CORT) accounts for about 4.21% of the fund's total assets, followed by Doximity Inc. Class A (DOCS) and Leonardo Drs Inc. (DRS).

Its top 10 holdings account for approximately 26.48% of JSML's total assets under management.

Performance and Risk

The ETF return is roughly 13.16% and was up about 12.72% so far this year and in the past one year (as of 12/24/2024), respectively. JSML has traded between $55.56 and $73.60 during this last 52-week period.

JSML has a beta of 1.27 and standard deviation of 25.40% for the trailing three-year period. With about 206 holdings, it effectively diversifies company-specific risk.

Alternatives

Janus Henderson Small 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 $12.53 billion in assets, Vanguard Small-Cap Growth ETF has $19.44 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 Cap Growth Alpha ETF (JSML): ETF Research Reports

Corcept Therapeutics Incorporated (CORT) : Free Stock Analysis Report

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

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

Doximity, Inc. (DOCS) : Free Stock Analysis Report

Leonardo DRS, Inc. (DRS) : Free Stock Analysis Report

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