The John Hancock Multifactor Emerging Markets ETF (JHEM) is the latest new-to-market ETF this year to suddenly gather assets overnight.
In the past week, JHEM went from being a $4 million ETF to a $284 million fund thanks to three days of net creations amounting to a 6,000% AUM growth for this fund. JHEM launched this past September, and it turns two months old today.
JHEM tracks a multifactor-selected and -weighted index of large- and midcap stocks from emerging markets. It’s part of a larger lineup of equity multifactor ETFs that John Hancock began bringing to market in 2015.
The fund competes in a segment populated by some heavyweights such as the $55.4 billion Vanguard FTSE Emerging Markets ETF (VWO) and the $47.9 billion iShares Core MSCI Emerging Markets ETF (IEMG). These massive ETFs are hugely liquid and cheap, each charging only 0.14% in expense ratio. JHEM, a smart-beta approach to the space, costs a lot more at 0.55%.
Who has been suddenly buying this ETF? According to John Hancock, a lot of these assets are internal—the latest example of a growing trend among new issuers that we call “bring your own assets.” BYOA refers to asset management firms that create new ETFs and put their own clients’ money into them.
Much like J.P. Morgan did recently when it shifted client assets out of competing third-party ETFs and into its own proprietary ETFs, John Hancock did the same thing. The firm is a well-established mutual fund manager with more than $80 billion of assets under management, and it now offers 14 ETFs, together commanding $2.25 billion in total assets.
“Recently, the John Hancock Asset Allocation portfolio management team increased its funds holdings in several of John Hancock’s ETFs,” a spokesperson for the company told ETF.com. “It made an allocation a year after our ETFs launched in 2015, and have now increased its position. This action is consistent with our practice of using proprietary funds inside our asset allocation funds.”
Most emerging market equity ETFs are down this year, but these ETFs have seen an uptick in demand in recent weeks, as Bloomberg reported. Some $1.3 billion in fresh net assets has found its way into EM ETFs in the past week, bringing year-to-date inflows to $20.5 billion into these funds.
Contact Cinthia Murphy at [email protected]