More smartness comes to the indexing space in the form of an ETF (believe in the Force, Luke, just believe in The Force).
As first announced (er, sorry, "unveiled"), in July:
http://blogs.barrons.com/focusonfunds/2015/07/13/john-hancock-to-partner-with-dimensional-fund-advisors-on-smart-beta-etfs/John Hancock Investments filed the paperwork with the SEC to offer six factor-based ETFs, to be subadvised by Dimensional Fund Advisors. I assumed they would be some kind of enhanced index funds, or index funds enhanced by some kind of smartness ("smart-beta").
And so they become, as described upon their initiation yesterday:
http://blogs.barrons.com/focusonfunds/2015/09/29/john-hancockdfa-multifactor-etfs-debut/?mod=BOL_hp_blog_fofJohn Hancock Investments’ first exchange-traded funds hit the market on Tuesday.
Hancock’s six “smart-beta” stock ETFs are are driven by Dimensional Fund Advisors, the market-beating investment firm that adheres to the academic work of Eugene Fama and Kenneth French. Four of the index-tracking ETFs target market sectors, while two others aim at large- and medium-sized companies.
John Hancock Multifactor Large Cap ETF (JHML) (0.35%)
John Hancock Multifactor Mid Cap ETF (JHMM) (0.45%)
John Hancock Multifactor Consumer Discretionary ETF (JHMC) (0.5%)
John Hancock Multifactor Financials ETF (JHMF) (0.5%)
John Hancock Multifactor Healthcare ETF (JHMH) (0.5%)
John Hancock Multifactor Technology ETF (JHMT) (0.5%)Who knows? Maybe some or all of them will work out just fine.
I think DFA uses 4 factors to take a measure of things, but I can't recall what they are. Perhaps someone could step into this thread and specify what those factors are.
Comments
https://www.dimensional.com/media/documents/etf/Large Cap Index/rulebook/John Hancock Dimensional Large Cap Index Rulebook.pdf
available here:
https://www.dimensional.com/john-hancock-dimensional-indexes.aspx
on page 3 of pdf, would seem to include:
Size, Relative Price, Profitability and Momentum
Can anyone confirm? Does anyone know if DFA/Hancock set up a ETF-focussed site for these ETFs yet?
quality outfit.
http://www.etf.com/sections/daily-etf-watch/daily-etf-watch-jpm-plans-europe-funds
@ibartman Momentum, of course! That's the one I couldn't recall. Thanks for looking it up. Now, if they were to offer a fund in the small cap space (where I think their out-performing strategy is really their claim to fame), then I'd have to admit I'd probably have to dig fairly deeply into those documents, despite the fact I'm still quite reluctant to use ETFs for anything other than short(er)-term trading purposes. And that, it appears, puts me increasingly in the "outlier" position, once again (sigh):
from http://www.ai-cio.com/channel/ASSET-ALLOCATION/Smart-Beta-s-ETF-Domination/?curator=thereformedbroker&utm_source=thereformedbroker
WEBSITE
http://etf.jhinvestments.com/etf/home.html
BROCHURE
http://etf.jhinvestments.com/etf/documents/brochures/ETFEDBR.pdf
WHITEPAPERS
http://etf.jhinvestments.com/etf/research-and-education.html#whitepapers
E.T.F. LINEUP
http://etf.jhinvestments.com/etf/our-etfs.html
expensive or they will have a revolt from the advisers who use the mutual funds.
These funds effectively mimic Dimensional’s distinctive investment approach in an index format.
Morningstar's take: http://news.morningstar.com/articlenet/article.aspx?id=717639
I think Alex Bryan sorts it out pretty well, esp. his ending where he writes:
"While the large-cap multifactor strategy has merit, long-term investors should be wary of John Hancock’s four multifactor sector funds. There is no reason to believe the approach should work better when restricted to a single sector, and investors in these funds sacrifice diversification. Tactical sector investing might make sense for some, but not for the type of long-term investor Dimensional targets. Dimensional developed these strategies at the request of John Hancock."
On the other hand, give 'em 6,9,12 months to establish a working portfolio, and it might prove interesting to compare the composition of the healthcare fund, using the DFA multi-factor methodology, with that of other HC funds, both active and indexed.