This ETF tracks an index that combines value, size and profitability factors within the US mid-cap universe. Rather than weighting by market capitalization, it selects holdings using a factor-tilt approach.

It suits mid-cap investors who want exposure to value and profitability factors beyond simple market-cap weighting.

The ETF is passively managed (index-tracking) by John Hancock.

Following an index designed by Dimensional Fund Advisors, the fund holds a broadly diversified portfolio centered on mid-cap stocks with high value, size and profitability factor scores. By adjusting weights according to factor scores instead of market capitalization, it differs from traditional passive mid-cap ETFs.

• Factor-based stock selection sets it apart from pure market-cap weighting
• Broad diversification across hundreds of stocks

Assets under management (AUM) stand at $6.0B, and the total expense ratio is 0.41% per year.

Differences in fees and asset size versus peers in the same category stem from the maturity of the investment strategy and the liquidity environment.

As a mid-cap factor ETF, its performance relative to large-cap indexes has fluctuated with market style rotation. Short-term swings are influenced by interest rates and the economic cycle.

As interest in factor investing continues, the fund tends to move in step with fund flows across the mid-cap category, and the strength of inflows varies depending on the phase of style rotation.

Its strengths are factor-based diversification and mid-cap exposure, while its weakness is relatively limited liquidity compared with large-cap funds.

The comparison ETFs shown in the table are a mix of large-cap factor products using value or fundamental weighting and small-cap factor products, so their market-cap ranges differ but their factor philosophy is similar. Additional alternatives in the same mid-cap factor category include the low-cost mid-cap value fund IWS, the mid-cap growth fund IWP, and the actively managed product DFAC from the Dimensional family, which holds the underlying securities directly. These allow you to compare factor exposure methods and fee structures side by side.

Here are the points to review before investing in JHMM. Because it is a factor-based mid-cap ETF, you should check liquidity, the factor cycle and the fee structure together, and it helps to understand in advance how it differs from market-cap-weighted ETFs.

The risks are that mid caps are more volatile than large caps and that factor styles can underperform depending on market conditions. In addition, because liquidity is lower than for large-cap ETFs, it is worth checking the bid-ask spread when trading.

It is an option worth considering for mid-cap investors who want factor exposure beyond simple market-cap weighting. Investors who place a high priority on liquidity may also want to compare large-cap factor ETFs.