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 $420.22 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

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.

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 0.75%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 25.70% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Applovin Corp. Class A (APP) accounts for about 10.36% of total assets, followed by Heico Corporation (HEI) and Incyte Corporation (INCY).

The top 10 holdings account for about 28.52% 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 return is roughly 1.16% so far this year and it's up approximately 21.10% in the last one year (as of 01/07/2025). In the past 52-week period, it has traded between $63.20 and $82.80.

The ETF has a beta of 1.15 and standard deviation of 23.48% 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 good 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 $12.95 billion in assets, Vanguard Small-Cap Growth ETF has $19.72 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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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