JHancock Corporate Bond ETF’s Process Pillar rating is Average, but a strong management team still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns an Above Average People Pillar rating. The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable overweight position in corporate bonds and AAA rated bonds compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. John Hancock Corporate Bond ETF earns an Average Process Pillar rating.    The leading factor in the rating is the experience of the management team, which averages 20 years at this fund. Low expenses across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also influence the rating. The pattern of low expenses at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 38%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

 Compared with other funds in the Corporate Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the category average, the managers have been significantly overweight corporate debt in recent years. In the latest month, the strategy has relatively overweighted corporate debt compared with its peers as well. Additionally, there's been a bias away from AAA rated bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to AAA rated bonds than peers. Finally, during the past few years, the fund leaned meaningfully away from debt with 10- to 15-year maturities. In recent months, the strategy also had less exposure to debt with 10- to 15-year maturities compared to its peers.

 This strategy has a 4.5% 12-month yield, higher than its average peer's 4.2%. It also has a 5.3% 30-day SEC yield (a measure similar to yield-to-maturity). While a higher yield may deliver more income, it also tends to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BBB.

Average

Process

John Hancock Corporate Bond ETF earns an Above Average People Pillar rating. Jeffrey N. Given, the longest-tenured manager on the strategy, boasts over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.9 stars, reflecting below-average risk-adjusted performance versus category peers. Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of 20 years of listed portfolio management experience. As a team, they manage three investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha in aggregate. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Above Average

People

Manulife Financial Corp has revamped its wealth- and asset-management business off the long-term strength of its successful U.S. unit, meriting an Above Average Parent rating. 

One of Canada’s Big Three life insurance companies, Manulife operates primarily in Canada, the United States, and Asia, with the bulk of assets in the U.S. The firm united its investment and wealth-management groups into a single, global segment in 2017 and 2018 and showcased it as a high-potential business. Since then, the group has restructured to mix three regional heads—U.S. & Europe, Asia, and Canada—with three global leaders segmented by channel: Retail, Retirement, and Institutional.

Manulife has entrusted this initiative to key individuals from its U.S. outfit, John Hancock Investments. For instance, Andy Arnott recently shifted from focusing on the U.S. and European unit to head up the firm’s global retail efforts. Leadership hopes this structure will allow it to leverage successful initiatives in its distinct regional markets.

John Hancock’s manager research team has long prioritized best-in-class managers regardless of firm affiliation. While much of the firm’s fixed-income strategies are run by Manulife teams globally, external managers dominate the firm’s equity lineup in the U.S. In its home market of Canada, Manulife’s internal teams, which boast strengths and weaknesses, manage most of the firm’s offerings, though the firm also has a strategic partnership with investment stalwart Mawer.

Parent

John Hancock Corporate Bond ETF

JHCB is actively managed to focus on investment-grade corporate bonds, of any maturity, that are perceived as undervalued.

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