The latest filing from John Hancock lists Dimensional Fund Advisors as the subadvisor for its index-based ETFs, and the funds’ underlying benchmarks will be designed by DFA and carry the Dimensional name. Up until now, DFA has so far shunned both index investing and the ETF market, but it is nonetheless generally well-regarded by indexing fans.
DFA is known for its “passive,” quantitatively based approach to investing that is built on the academic research of some of the world’s most important financial minds. In addition to co-CEOs David Booth and Eduardo Repetto, its boards of directors includes the likes of Eugene Fama, Kenneth French, Roger Ibbotson and Myron Scholes.
The passive approach essentially involves buying and holding large swaths of a fund’s target market and tilting the portfolio toward certain factors. While not exactly an index-based strategy, the low turnover and systematic approach is appealing to many believers in indexing.
However, it can be difficult to invest in the funds, as the fund provider is very selective about the financial professionals it allows to sell its products. The firm has roughly $380 billion in assets under management.
The ETFs and their expense ratios include the following:
- John Hancock Multifactor Large Cap ETF, 0.35 percent
- John Hancock Multifactor Mid Cap ETF, 0.45 percent
- John Hancock Multifactor Consumer Discretionary ETF, 0.50 percent
- John Hancock Multifactor Financials ETF, 0.50 percent
- John Hancock Multifactor Healthcare ETF, 0.50 percent
- John Hancock Multifactor Technology ETF, 0.50 percent
The general index methodology overweights companies in the target universe that have smaller market capitalizations, lower relative prices and higher profitability, and then selects a subset of those securities for the index based on their price momentum.
The filing does not include tickers, but does mention that the funds will be listed on the NYSE Arca.
New Leveraged MLP ETN
The Etracs 2xMonthly Leveraged S&P MLP Index ETN (MLPV) rolled out today. The note provides twice the monthly return of its underlying index, which is the same benchmark that underlies the iPath S&P MLP ETN (IMLP).
The S&P MLP Index tracks both MLPs and limited liability corporations (LLCs); it had 79 components as of the end of June.
MLPV comes with an annual tracking fee of 0.95 percent.