John Hancock Investments is getting closer to making its exchange traded funds splash as the Boston-based asset management giant said today it has selected Dimensional Fund Advisors to manage six multifactor ETFs.
John Hancock’s board of trustees approved the product lineup last month, according to a statement issued today. The suite of ETFs includes:
- John Hancock Multifactor Large Cap ETF
- John Hancock Multifactor Mid Cap ETF
- John Hancock Multifactor Consumer Discretionary ETF
- John Hancock Multifactor Financials ETF
- John Hancock Multifactor Healthcare ETF
- John Hancock Multifactor Technology ETF
John Hancock initially filed plans for ETFs nearly four years ago, but has yet to bring an ETF to market. However, a new filing with the Securities and Exchange Commission indicates the firm is getting closer to launching its first ETFs.
The new filing provides details and expense ratios on the proposed ETFs. For example, the John Hancock Multifactor ETF, which is expected to charge 0.35% per year, will track an index comprised “ a subset of securities in the U.S. Universe issued by companies whose market capitalizations are larger than that of the 801st largest U.S. company at the time of reconstitution. In selecting and weighting securities in the Index, the Index Service Provider uses a rules-based process that incorporates sources of expected returns. This rules-based approach to index investing may sometimes be referred to as multifactor investing, factor-based investing, strategic beta, or smart beta. As currently contemplated, securities are classified according to their market capitalization, relative price, and profitability,” according to the filing. [John Hancock Enters ETF Fray]
The John Hancock Multifactor Mid Cap ETF is expected to charge 0.45% per year. That ETFcan hold companies “whose market capitalizations are between the 200th and 950th largest U.S. company at the time of reconstitution,” according to the filing.
John Hancock’s four proposed sector ETFs will each carry annual fees of 0.5%.
“E ach ETF will maintain an objective of seeking to provide investment results that closely correspond, before fees and expenses, to the performance of its underlying index; Dimensional will be designing the six underlying indexes. While the ETFs are passively managed, the indexes will embody Dimensional’s multifactor investment philosophy and approach to portfolio construction, along with rules aimed at minimizing unnecessary or costly turnover,” according to the statement.
Dimensional launched its first strategy, which focused on the out-performance of U.S. small-caps, in 1981. That was followed by a fixed income strategy in 1983. The firm manages $406 billion for investors worldwide, according to its website.
ETF Trends editorial team contributed to this post.
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