Introduction
Recently, while looking through ETFs that hold my number one stock, XPEL (XPEL), I came across the Janus Henderson Small Cap Growth Alpha ETF (NASDAQ:JSML). I often do this to find other similar stocks I may be interested in and occasionally find a solid ETF as well. After examining this ETF, it appears this is a solid actively managed choice for those looking for outperformance in the small cap growth space. While their position in XPEL is just 0.07% of total assets, the fund's current holdings and track record align with its outperformance, making it a potentially solid pick for those looking for actively managed growth ETFs.
A Focus On Growth, Profitability, And Capital Efficiency Has Paid Off
The Janus Henderson Small Cap Growth Alpha ETF aims to invest in the best companies based on growth, profitability, and capital efficiency within the Russell 2000 growth index. The ETF has outperformed, quite handily at times, both the index and passive Russell growth ETFs. Since mid-2017, the ETF has returned more than double that of the Russell 2000 Growth ETF (IWO) and the Vanguard Russell 2000 Growth ETF (VTWG), suggesting that the active management style is working relative to the passive indexing of various other ETFs more commonly used.
Furthermore, small cap growth has outperformed the overall Russell 2000 ETF (IWM), which probably isn't all that surprising, given growth has consistently outperformed value over the last decade or so. I'm not going to speculate on whether "growth" companies will continue to outperform, other than to say that a reasonably priced company growing earnings and revenue with a long runway has a much better chance at yielding high returns than a company earning similar profits every year, with little opportunity for reinvestment.
Concentration Is Key
JSML is concentrated in technology, which is no
