If you're interested in broad exposure to the Small Cap Growth segment of the US equity market, look no further than the Janus Henderson Small Cap Growth Alpha ETF (JSML), a passively managed exchange traded fund launched on February 23, 2016.
The fund is sponsored by Janus Henderson. It has amassed assets over $314.75 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.3%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.58%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector -- about 26.3% of the portfolio. Healthcare and Information Technology round out the top three.
Looking at individual holdings, Bloom Energy Corporation Class A (BE) accounts for about 2.2% of total assets, followed by Ryman Hospitality Properties Inc. (RHP) and Piper Sandler Companies (PIPR).
The top 10 holdings account for about 18.02% of total assets under management.
Performance and Risk
JSML seeks to match the performance of the Janus Small Cap Growth Alpha Index before fees and expenses. The Janus Henderson Small Cap Growth Alpha Index selects small-sized capitalization stocks that are poised for smart growth by evaluating each company performance in three critical areas: growth, profitability, and capital efficiency.
The ETF return is roughly 9.22% so far this year and it's up approximately 46.45% in the last one year (as of 04/22/2026). In the past 52-week period, it has traded between $57.50 and $80.73.
The ETF has a beta of 1.23 and standard deviation of 21.6% for the trailing three-year period. With about 123 holdings, it effectively diversifies company-specific risk.
Alternatives
Janus Henderson Small Cap Growth Alpha ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JSML is a good option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth Index Fund ETF Shares (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $13.62 billion in assets, Vanguard Small-Cap Growth Index Fund ETF Shares has $22.32 billion. IWO has an expense ratio of 0.24% and VBK charges 0.05%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Janus Henderson Small Cap Growth Alpha ETF (JSML): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).