Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the Janus Henderson SmallMid Cap Growth Alpha ETF (JSMD) is a passively managed exchange traded fund launched on 02/23/2016.
The fund is sponsored by Janus Henderson. It has amassed assets over $205.21 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.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Also, growth stocks are a type of equity that carries more risk compared to others. 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
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 0.29%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 29.10% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Ppd Inc (PPD) accounts for about 3.19% of total assets, followed by Ubiquiti Inc (UI) and Paylocity Holding Corp (PCTY).
The top 10 holdings account for about 22.07% 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 has lost about -4.14% so far this year and is down about -0.24% in the last one year (as of 01/12/2022). In the past 52-week period, it has traded between $63.56 and $70.64.
The ETF has a beta of 1.17 and standard deviation of 25.42% for the trailing three-year period. With about 265 holdings, it effectively diversifies company-specific risk.
Alternatives
Janus Henderson SmallMid Cap Growth Alpha ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, JSMD is a great option for investors seeking exposure to the Style Box – Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard SmallCap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $11.52 billion in assets, Vanguard SmallCap Growth ETF has $15.30 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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