Janus Comes out with 'Smart Growth' ETFs | ETF Trends

Janus Capital Group is expanding its line of exchange traded funds to include a suite of so-called Smart Growth options that employ a number of fundamental factor screens from its legacy investment process to potentially generate outperformance.

The Janus Small Cap Growth Alpha ETF (NasdaqGM: JSML) and Janus Small/Mid Cap Growth Alpha ETF (NasdaqGM: JSMD) began trading Thursday, February 25, according to a press release. Both funds have a 0.50% expense ratio.

The Smart Growth investment process will tap into Janus Capital Group’s decades of refined fundamental research to identify resilient small- and mid-cap stocks that are expected to maintain long-term sustainable growth.

“We view traditional fundamental active investing as both an art and a science,” Jonathan Coleman, Head of Growth Equities and Portfolio Manager at Janus Capital, said in the press release. “We were able to extract the science behind our legacy small and mid-cap investment process and quantified key attributes of Smart Growth and package them into a systematic process, creating a systematic index methodology.”

Specifically, the two funds will implement a proprietary methodology that evaluates every company on 10 fundamental factors in three areas and selects components from the top 10% of this universe to potentially generate improved risk-adjusted returns as compared to traditional growth indices.

The fundamental factors include measures tied to a stock’s outperformance relative to other small-cap stocks, and indicate a company’s performance with respect to growth like revenue growth rate over 2-, 5- and 8-year periods; profitability measures like margin expansion, profit margin and earnings per share over time; and capital efficiency, such as returns on invested capital.