February 2, 2024
Exchange-traded funds
ETFs are playing a major role in the evolution of investing. We offer investors ETFs that are on the leading edge of this change.
The evolution of ETFs
ETF investing used to be just about tracking an index as cheaply and passively as possible. Today, ETFs run the gamut from passive to strategic beta to a full range of increasingly specialized active strategies. ETFs have also branched out beyond equities to other asset classes, such as fixed income, commodities, and alternatives.
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1 Passive investing
- Typically tracks a market-cap-weighted index
- Market cap weighting may result in over concentration
- Get exposure to specific segments of the market, or the entire market
- Little or zero tracking error
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2 Strategic beta
- Tracks a rules-based index that isn't focused on market cap weight
- May avoid potential concentration of market cap weighting
- Combines elements of passive and active management
- Often based on academic research
- Higher tracking error than pure passive
- May be based on single factors (size, relative value, profitability, momentum, volatility, etc.) or may combine these factors in a multifactor strategy
- May be used for core portfolio positions, specific outcomes, enhance passive allocations
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3 Active investing
- Portfolio manager investment decisions and security selection, not tied to a market-cap-weighted index
- Greater manager flexibility based on assessment of current market environment
- Potential for outperformance/underperformance
- Higher tracking error than passive and strategic beta
- Typically higher turnover
- ETF may have less portfolio transparency (semitransparent active ETFs)
Key events in the evolution of U.S. ETFs
Timeline
Important disclosures
Key metrics of the ETF universe
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$8.1T
Combined assets of all ETFs listed in the United States¹
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3,367
Total number of ETFs listed in the United States¹
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$131B
2023 marked a new record for net flows into actively managed ETFs²
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543
New ETFs launched in 2023³
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74%
of advisors said performance was the most important ETF attribute to them.⁴
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$598B
Inflows of continued interest in actively managed ETFs²
Important disclosures
1 ETF.com, as of 12/31/23. 2 “ETFs Cap Off Another Year of Inflows in Style” Morningstar, 1/2/24. 3 “ETF Industry Shatters Launch Record in 2023”, ETF Trends, 1/2/24. 3 "ETF Industry Shatters Launch Record in 2023”, ETF Trends, 1/2/24. 4 Cerulli, 2023.
Beyond passive: strategic beta and active ETFs
ETFs have evolved to include a variety of ways for investors to gain market exposure, from the pure beta of traditional index strategies to fully active strategies that don’t adhere to an index at all. Strategic beta is thought of as a middle ground that combines the rules-based discipline of passive investing with the potential outperformance of active management.
Advisor adoption of ETFs is growing
Financial professionals are adding ETFs to their tool kits and investor portfolios as more strategies and asset classes become available. For example, more advisors are using ETFs for specific strategies, including sectors, fixed-income asset classes, alternatives, and thematic investing.
90% of advisors recommend and use ETFs with their clients.⁵
Source: “U.S. Exchange-Traded Fund Markets 2023,” Cerulli Associates, 2023. Some values may not total 100% due to rounding.
Important disclosures
5 2023 Trends in Investing Survey, Journal of Financial Planning.
What you need to know about buying/selling ETFs
Understand why net asset value (NAV) premiums/discounts may occur
Avoid trading at the market open/close
Use limit orders
Source: Morningstar data as of 12/31/21
Important disclosures
6 “The Tax Efficiency of ETFs Alleviated Some Pain for Investors in 2022,” Morningstar.com, 12/9/22. 7 “US ETF investors mainly motivated by tax loophole, study shows,” Financial Times, 2/15/21.
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Manulife Investment Management is an established asset manager with global resources and expertise extending across equity, fixed income, and alternative investments as well as asset allocation strategies.
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Learn more
Dimensional Fund Advisors is a pioneer of multifactor investing. The company has applied ideas rooted in academia for decades and, today, it’s one of the most well-respected managers in the field. Dimensional’s systematic approach is backed by insight gained from decades of academic research and experience implementing rules-based strategies in competitive markets.
Dimensional is a trademark of Dimensional Fund Advisors LP.
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Boston Partners is a specialist in traditional value equity investing based on a time-tested investment process developed in the 1980s that emphasizes investing in companies with attractive value characteristics, strong business fundamentals, and positive business momentum.
Explore our ETFs
Fund | Managed by | Morningstar category | Use for |
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JHCB
Corporate Bond ETF
|
Managed by Manulife Investment Management | Morningstar category Corporate Bond | Use for High-quality income opportunities |
Managed by Boston Partners | Morningstar category Foreign Large Value | Use for Core international holding | |
Managed by Manulife Investment Management | Morningstar category Muni National Intermediate | Use for Tax planning strategies | |
Managed by Manulife Investment Management | Morningstar category Large Blend | Use for Core equity holding | |
Managed by Manulife Investment Management | Morningstar category Foreign Large Value | Use for Diversifying sources of income | |
Managed by Manulife Investment Management | Morningstar category Intermediate Core-Plus Bond | Use for High-quality income opportunities | |
Managed by Dimensional Fund Advisors | Morningstar category Foreign Large Blend | Use for Core international holding | |
Managed by Dimensional Fund Advisors | Morningstar category Diversified Emerging Markets | Use for Core international holding | |
Managed by Dimensional Fund Advisors | Morningstar category Large Blend | Use for Core equity holding | |
Managed by Dimensional Fund Advisors | Morningstar category Mid-Cap Blend | Use for Core equity holding | |
Managed by Dimensional Fund Advisors | Morningstar category Small Blend | Use for Core equity holding | |
JHPI
Preferred Income ETF
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Managed by Manulife Investment Management | Morningstar category Preferred Stock | Use for Diversifying sources of income |
Managed by Manulife Investment Management | Morningstar category Large Value | Use for Diversifying sources of income |
Important disclosures
Fundamental All Cap Core ETF:
This ETF is different from traditional ETFs. Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. For example: You may have to pay more money to trade the ETF’s shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information. The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders. These additional risks may be even greater in bad or uncertain market conditions. The ETF will publish on its website each day a “Tracking Basket” designed to help trading in shares of the ETF. While the Tracking Basket includes some of the ETF’s holdings, it is not the ETF’s actual portfolio. The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF secret, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance. For additional information please refer to the fund’s prospectus and/or statement of additional information.
Investing involves risks, including the potential loss of principal. These products carry many individual risks, including some that are unique to each fund. Please see the funds' prospectuses for additional risks. This material is not intended to be, nor shall it be interpreted or construed as, a recommendation or providing advice, impartial or otherwise. John Hancock Investment Management and its representatives and affiliates may receive compensation derived from the sale of and/or from any investment made in its products and services. John Hancock ETF shares are bought and sold at market price (not NAV), and are not individually redeemed from the fund. Brokerage commissions will reduce return.
Related viewpoints
November 16, 2023
What are semitransparent ETFs?
October 13, 2023
SMAs, ETFs, and mutual funds: which one's right for you?
Learn more
Investors: Ask your financial professional how adding ETFs can help you better position your portfolio for the long term.
Financial professionals: Learn more about how ETFs combine some of the most attractive features of active and passive strategies.
Request a meeting with a John Hancock Investment Management Business Consultant
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