Market Overview

A Multi-Factor Communication Services ETF Arrives

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A Multi-Factor Communication Services ETF Arrives

The communication services sector, which officially became the newest sector in the S&P 500 last year, continues getting more related exchange traded funds.

On Wednesday, John Hancock Investments launched the John Hancock Multifactor Media and Communications ETF (NYSE: JHCS).

What Happened

The new John Hancock Multifactor Media and Communications ETF is the 11th member of Hancock's multi-factor ETF suite. JHCS tracks the John Hancock Dimensional Media and Communications Index.

That index, as well as the other benchmarks tracked by Hancock's multi-factor sector ETFs, is designed by Dimensional Fund Advisors.

“JHCS follows the recently revised sector classification scheme that expanded or replaced the narrowly defined telecommunication services sector with a broader mix of media, communications, and technology companies,” according to a statement from Boston-based Hancock.

Why It's Important

As is the case with Hancock's other multi-factor sector ETFs, the new JHCS emphasizes the smaller cap, lower relative price, and higher profitability factors.

The new ETF holds 65 stocks and since it's not a cap-weighted fund, its lineup looks significantly different than those of the established communication services ETFs. A cap-weighted index of communication services stocks could allocate 40 percent or more of its weight to just Facebook Inc. (NASDAQ: FB) and the two share classes of Alphabet Inc. (NASDAQ: GOOG).

While Facebook is the largest component in JHCS, the new ETF devotes just 6.36 percent of its weight to the social media giant and the ETF's top 10 holdings combine for approximately 43 percent of the new ETF's weight.

What's Next

Communication services is the fourth-largest sector weight in the S&P 500 at a weight of 10.34 percent. The new JHCS has an annual fee of 0.40 percent, or $40 on a $10,000 investment.

John Hancock sponsors 18 ETFs. As of March 13, the issuer had $4.02 billion in ETF assets under management.

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Posted-In: John Hancock InvestmentsSector ETFs New ETFs ETFs Best of Benzinga

 

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