With stretched valuations and heightened volatility in the stock market today, a flexible approach to sector allocation is more important than ever. Our network believes financial stocks may be worth a closer look, and for good reason. Discover why John Hancock Regional Bank Fund’s opportunistic approach may be just the tactical allocation your clients’ portfolios need.
Financials currently trade at a roughly 29%1 discount to their long-term median price-to-book ratio for the sector, even after the recent surge of investor interest.
Financial stocks are trading at a significant discount to their long-term average1
Rising interest rates have been a tailwind for regional bank stocks1
Performance in the financials sector over the past year has been closely correlated with bond yields, as higher interest rates can lead to higher net interest margins for regional banks and, potentially, higher profits.
Earnings for the S&P 500 Index overall have flattened in recent years, while financials sector earnings have accelerated due to stronger loan growth and a positive credit environment. In fact, financials sector earnings are expected to continue to expand, in part, due to rising interest rates and continued strength in the U.S. economy.
Financial stocks’ recent earnings gains have outpaced the broad market1
When it comes to financials sector exposure, bigger isn’t always better. Unlike market-cap-weighted passive approaches, this fund’s veteran portfolio team actively targets undervalued opportunities across the sector, including small and midsize regional banks and merger candidates. The results are an average market capitalization of just $10.77 billion2 and a proven record of above-average performance and below-average risk.
John Hancock Regional Bank Fund Class A
Advisors: Ask a John Hancock Investments Business Consultant for a detailed review of how John Hancock Regional Bank Fund can work in your clients’ portfolios.
All funds may experience periods of negative performance.
FactSet, as of 3/31/17. Forecast includes actual earnings of companies that have reported and estimates of companies that have yet to report. Financials sector represents those companies included in the S&P 500 Index that are classified as members of the Global Industry Classification Standards financials sector. Pice to book is the ratio of a stock’s price to its book value per share. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. It is not possible to invest directly in an index. Past performance does not guarantee future results.
John Hancock Asset Management, as of 3/31/17.
For each managed product, including mutual funds, variable annuity and variable life subaccounts, exhange-traded funds, closed-end funds, and separate accounts, with at least a 3-year history, Morningstar calculates a Morningstar rating based on a Morningstar Risk-Adjusted Return that accounts for variation in a fund’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. Exchange-traded funds and open-end mutual funds are considered a single population for comparative purposes. The top 10.0% of funds in each category, the next 22.5%, 35.0%, 22.5%, and bottom 10.0% receive 5, 4, 3, 2, or 1 star(s), respectively. The overall Morningstar rating for a managed product is derived from a weighted average of the performance figures associated with its 3-, 5, and 10-year (if applicable) Morningstar rating metrics. The rating formula most heavily weights the 3-year rating, using the following calculation: 100% 3-year rating for 36 to 59 months of total returns, 60% 5-year rating/40% 3-year rating for 60 to 119 months of total returns, and 50% 10-year rating/30% 5-year rating/20% 3-year rating for 120 or more months of total returns. Star ratings do not reflect the effect of any applicable sales lead. The fund’s Class A share overall raing was 5 stars out of 100 funds for 3 years, 5 stars out of 96 funds for 5 years, and 4 stars out of 72 funds for 10 years. Please note that Class A shares may not be available to all investors and that performance of other share classes may vary. Different share classes may have different Morningstar ratings. Past performance does not guarantee future results.
Morningstar Direct. Calculations are based on Class A shares for the 3-year period ended 3/31/17. Alpha measures a manager’s incremental return that cannot be attributed to market movements. Beta measures the sensitivity of the fund to its benchmark. The beta of the market (as represented by the stated benchmark) is 1.00. Accordingly, a fund with a 1.10 beta is expected to have 10% more volatility than the market. The fund’s benchmark is the S&P Composite 1500 Banks Index, which tracks the performance of publicly traded large- and mid-cap banking companies in the United States. It is not possible to invest directly in an index.
A portfolio concentrated in one sector or that holds a limited number of securities may fluctuate more than a diversified portfolio. The stock prices of midsize and small companies can change more frequently and dramatically than those of large companies. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. Hedging and other strategic transactions may increase volatility and result in losses if not successful. Please see the fund’s prospectus for additional risks.