The Janus Henderson Small Cap Growth Alpha ETF (JSML) was launched on 02/23/2016, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Growth segment of the US equity market.

The fund is sponsored by Janus Henderson. It has amassed assets over $269.82 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

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.

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 1.22%.

Sector Exposure and Top Holdings

ETFs offer a 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.

This ETF has heaviest allocation to the Industrials sector--about 28% of the portfolio. Healthcare and Information Technology round out the top three.

Looking at individual holdings, Corcept Therapeutics Incorporated. (CORT) accounts for about 3.67% of total assets, followed by Corvel Corporation (CRVL) and Catalyst Pharmaceuticals Inc. (CPRX).

The top 10 holdings account for about 23.68% of total assets under management.

Performance and Risk

JSML seeks to match the performance of the Janus Small Cap Growth Alpha Index before fees and expenses. 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.

The ETF has lost about -1.82% so far this year and is up about 11.26% in the last one year (as of 02/25/2025). In the past 52-week period, it has traded between $56.12 and $73.60.

The ETF has a beta of 1.28 and standard deviation of 24.60% for the trailing three-year period. With about 204 holdings, it effectively diversifies company-specific risk.

Alternatives

Janus Henderson Small 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, JSML is a sufficient 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 $11.99 billion in assets, Vanguard Small-Cap Growth ETF has $19.41 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 Cap Growth Alpha ETF (JSML): ETF Research Reports

Corcept Therapeutics Incorporated (CORT) : Free Stock Analysis Report

Catalyst Pharmaceuticals, Inc. (CPRX) : Free Stock Analysis Report

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

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

This article originally published on Zacks Investment Research (zacks.com).

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