This podcast is being brought to you by John Hancock Investment Management Distributors LLC, member FINRA, SIPC. The views and opinions expressed in this podcast are those of the speakers, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security. There is no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal.

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John

Hello and welcome to the Portfolio Intelligence podcast. I'm your host John Bryson, head of investment consulting and education savings at Manulife John Hancock Investments. Today is July 28, 2025. As always, the goal of this podcast is to help investment professionals deliver better outcomes for their clients and their practice. Sometimes that means taking a look behind the curtain to understand asset managers better.

With that in mind, I've asked Matt Hammer, our head of product management at Manulife John Hancock Investments, to talk about what he and the team does and how it impacts investors. So Matt, welcome to the Portfolio Intelligence podcast.

Matt

Great. John, thanks so much for having me.

John

You got it. So hey, tell us, what does a product management team do and why is that important to our clients?

Matt

Yeah, thanks, John. So, product management is critical in the asset management space, and we have a team globally with various teams across the globe and all the various regions. And really what we're trying to do is ensure that our platform of investment options is suited for clients where they want to be met. So whether that be vehicle types or different types of investments in different asset classes, we're not only looking at what is on our current platform and ensuring that those are the best areas for clients, but also taking a look at, from a product development standpoint, where we can anticipate those needs may be in the future and hopefully provide the right investment types for clients moving forward.

You know, John, we also work very closely with our distribution team as well. And one of our main roles is to speak with financial advisors across the country here in the U.S. to help them not only with individual investment decisions and helping serve their clients, but also from an asset allocation standpoint, understanding the various investment options and the various managers as well.

John

Okay. And knowing that we have a multi-manager model, we've talked about that in the podcast before. When you're looking to hire different managers around the world, what are some of the things you're looking for?

Matt

Yes. So, we're looking for everything when it comes to a manager to be selected for the platform, John. But to boil it down, we're not only looking at just performance and things like that. We're looking for what I like to call the performance blueprint. And what that means is, you know, various managers will perform in different ways given a certain macro regime or given an interest rate policy or based on geopolitical events and things like that. So, what we're trying to do is understand a manager, understand their philosophy, their process, everything about that specific manager, and try to look at how that manager may complement other investment options on our platform, but also understand exactly how they're going to perform given a given market regime.

And a simple example of that I always like to use is in the U.S. large value space. It's a very common space for people to invest. Well, there's deep value, there's core value, there's dividend or yield-focused value managers, and as you'd understand, those managers are going to perform differently based on different market regimes. So, what we really want to understand is not looking at them as a large value manager, but what their actual mandate is and how it can complement other mandates and other opportunities on our platform.

And we're also looking at partnering with managers that can be vehicle agnostic, so to speak. So, we understand that mutual funds, ETFs, active ETFs, SMAs, CITs, private assets—both illiquid and semi-liquid—these are areas that clients and advisors want to invest in based on their client needs. And so we're trying to work with managers that can also help complement us not only from a strategy perspective but also from a vehicle perspective.

John

Okay, really interesting. So as this kind of go-between between all the portfolio managers on our platform, in our business consultant and financial professionals, you must be pulled into a lot of different conversations that can go in a lot of different directions. What are the critical conversations looking like today?

Matt

Yeah, you know, John, I try to look at every conversation, as you might imagine, as critical to that client or that advisor. But if I were to boil down what the vast majority of my discussions are right now, it is, by leaps and bounds, fixed income as number one and people understanding that. The other would be private assets in the private credit space. And what I find advisors…so they're both kind of in that fixed income area, so it's public and private…and what I find is that advisors are really looking to not only broaden their knowledge in the space, really do some deep dives on the managers they may be using or may be building out and trying to use in the future. But John, it's quite fascinating, you know, advisors oftentimes don't really understand exactly what they own in all of these areas. And so, this is an area where we've been able to help guide advisors so that they can better serve their clients, again, based on those needs.

John

Okay, so it's an interesting comment. People don't always know what they own. We know there's a broad landscape out there, a lot of different investment options. You're talking a lot about fixed income, the public space fixed income, the private asset space. I want to talk about the public space first. As we look at portfolios, two of the largest parts of people's portfolios are in the core and core plus space…we call it core and core plus space. How does that apply here?

Matt

Well, it's a great question. And yeah, you know, obviously there are various types of advisors. So, I don't mean to say that people don't know exactly what they own. Here's what I mean by that comment, John: people often don't always open up under the hood and understand exactly what's in there. So, you bring up core and core plus. Many advisors, when they use core and core plus, they're looking at this as exactly what they are—that kind of core building block of a fixed income portfolio. But there is a ton of variability in the core and core plus space.

So, when you say core and core plus, that's a Morningstar peer group moniker, if you will. In 2019, Morningstar broke out the intermediate bond category into core and core plus. That's why we know it today as core and core plus. But what I found is that these are two huge areas, as you mentioned, of client portfolios. When I think about what advisors focus on, if I were to boil it down into that space, it comes down to really three areas.

Number one is, I look at: is this a top-down or bottom-up manager? When I talk about this with advisors, they are often puzzled by that question. Here's what I mean by that. When you look at top-down, this is trying to anticipate macro events, trying to anticipate where we are in the business cycle, anticipate interest rate movement and regime, and trying to make an asset allocation decision in that way.

When I think about bottom-up fixed income managers, I think about something that's so basic within fixed income: is this a good issuer as we underwrite it? Are they going to pay us our principal back, and are they going to pay us our interest along the way? It's about building a portfolio building block by building block.

John, I'm not here to tell you that top-down or bottom-up is good or bad. I'm just here to say that they're very different. So that's one of the first things we talk through with advisors: is their manager top-down or bottom-up? I believe—and we often believe—that it's easier to predict things like the shape of the yield curve or is this a good company than it is and what the Fed or the 10-year is going to do or what macro events are going to happen. As we sit in the middle to end of the second half of 2025 here, I think the first half was pretty indicative of that being hard to predict. So that's the first part: top-down or bottom-up.

The second part is around the client experience. This is something that I always talk with advisors about: what is the client experience that you are going to have with these managers? It's so hard to predict, we obviously don't know what's going to happen in the future. So, we look at things through two different lenses here in the client experience. We look at rolling returns, so average rolling returns, and we look at average rolling risk-adjusted returns.

If I could get on my soapbox for just a moment, I think the investment community has, if I could be so bold as to say, gotten a little bit lazy when it comes to how we look at performance. We look at annual performance; we look at 1-, 3-, 5-, and 10-year performance in a static manner. I just again…I just think that's a little bit lazy. It's not that it's an unimportant data point, but it shouldn't tell you the whole picture. If I look back five years or three years ago as of the end of June, or if I look at clients that invest on January 1 and take out their money on December 31, it just isn't a realistic scenario. Clients invest non-systematically. They invest every two weeks when they get a paycheck, if they get a bonus, if they get an inheritance, if they sell a home or a business. You get my point. They're not investing on April 1 or they’re not investing on January 1.

So, these dates that we've kind of gotten used to, again, I think are a little bit lazy. Back to the second thing that I always look at: the client experience. Rolling returns and average rolling returns—not only how often you beat your benchmark or how often you beat your peer group, but also by how much on an average rolling basis—can give you a much better snapshot into what the potential client experience will be. But importantly, it shows what the client experience has been for these managers on an absolute and risk-adjusted basis. So always looking at things from a rolling perspective.

So, number one, top-down or bottom-up. Number two, what is the client experience? And then one of the biggest eye-openers that we see is on this kind of portfolio composition concept that we run with—when it comes to core and core plus, this is extremely prevalent. We look at three areas in there, John. We look at sector composition, we look at credit quality composition, and we look at geographic composition. We do this over time, and we look at this through what I'll call a sand chart. You can see what a manager does over time in sector, geographic, and credit quality, and you start to understand if the performance blueprint and client experience is something that may be repeatable over time.

So, John, in the core and core plus space, just because they're in the same category, we often see drastic variations where you have some managers that are, just to use some simple examples, a lot into credit or high yield. A lot of managers go heavy into international fixed income. A lot of managers go heavy into treasuries and agency mortgages. I'm not saying that one allocation is good or bad. It's just a simple matter of understanding what you own and what your client goals are. And if you match those three things up to say, I know that my manager is either top-down or bottom-up, so I can understand what their view is. I understand what the client experience on a rolling basis has been, and also what this manager looks like over time from a portfolio construction standpoint. That is extremely eye-opening to clients within the core and core plus space, and frankly, almost all the public fixed income spaces.

John

That's really helpful. I mean, you didn't say it, but it kind of came through in the conversation that the first glance of 'Is this a one-star or five-star rated fund by Morningstar, and how has the performance been over one, three, five, and 10 years?' is just a starting point. You've given some great insights as to go deeper: is it top-down or bottom-up? Are they making big interest rate bets? Are they building it security by security? What's their blueprint? What should you expect in certain markets? And don't just look at last year's return—look at how it's done historically. Great insights for our investors.

Matt, I'd ask the same question. You, you handle the public fixed income space really well. Do you apply the same approach to the private fixed income space like private credit?

Matt

Yeah, we do. And obviously, there's a little less transparency there. So, I stick with that same concept, John, of knowing what you own. What I find is there's two types of advisors, and I'll more focus on the semi-liquid space—so interval, tender offer, BDC type of private credit here. You know, there's advisors that have been using these types of portfolios for a number of years, and they've been quite happy with them. And then there's another subset of advisors that are really starting to build this part of their portfolio out. And for both of those types of advisors, I have the same insight, which is, again, know what you own and understand what risks you're getting into.

And here's what I mean by that: I found that advisors often are overexposed to corporate credit risk, even in the private space. So, they'll own, you know, a BDC or an interval fund or whatnot, and they'll own it through a structure of these middle market or direct lending strategies. And I think middle market and direct lending strategies just, you know, are really good places to have invested, and these have been great for clients. But you have to understand that just because you have some manager diversification there, if you're using three or four managers and they're all middle market direct lending strategies, you know, your economic sensitivity, your cash flow, where you're getting your yield from, etcetera, where you're getting your total return from—well, it may be obviously with different companies—it’s all kind of correlated to each other in the sense that this is corporate credit risk. This is, is this company, it's cash flow risk, it's EBITDA risk, etcetera.

And so, what we found in the private credit space is that there's huge untapped areas of the market, and one that we've been really highlighting is the asset-based finance area. So, asset-based lending—and it's called various things by different companies—but this is a huge part of the market that can truly diversify a client's portfolio away from just corporate credit risk towards asset-based finance and asset-based risk and can give their clients a better total risk-reward portfolio. And if I use that large value example earlier, I'll just briefly use a large growth example just to mix it up a little bit. If you have three or four large growth managers, they all have a different philosophy. They all buy, you know, potentially slightly different variations of stocks, etcetera. But if the large growth category, you know, gets hit, right, like all four of them are going to go down, you know, to the same extent…to some extent, right? When you look at private credit, if you have all direct lending risk and all middle market corporate risk, then that's kind of the similar concept. So, diversifying that with things like asset-based finance is something that we found can be really additive to client portfolios.

John

Okay. And that's one of those ones it's important to not only know what you own and control, what you can control, and you can get diversification, is what you're saying in that space by doing some research and digging into it. That's great.

Matt

That's exactly right.

John

We covered a lot and this is great. If people do want to get to know their fixed income better, whether it's public or private, what ideas do you have for them to do that?

Matt

Yeah, it's a great, it's a great point. So this is something that we've actually empowered our business consultants at Manulife John Hancock with is what I call a fixed income audit. When I look at a manager, one of the first things I do is run what, again, I call a fixed income audit. This is a report that's going to give you all sorts of various modern portfolio theory returns, etcetera, that you'd find in any area. But it's also going to give you exposures over time, which ties into that part of the discussion I had earlier on portfolio composition. So, it's going to give you what this manager has looked like over time, and it's really, really insightful. So, I'd urge people to utilize that tool and do a fixed income audit on their managers.

And I'd also just say that we can run rolling returns for fixed income portfolios as well—both rolling returns as well as risk-adjusted returns—through your Manulife John Hancock Investments business consultant. So those would be two areas that I would look at, John. And then, since I'm talking to you, I'll pass it back to you because I know that your team in the Investment Consulting Group can do a true deep dive on the entirety of a fixed income portfolio. So, fixed income audit and rolling returns for a specific strategy or a few strategies, and looking at how those may compare, is a great first step. But leveraging you and your team here in the U.S. and the Investment Consulting Group would be another avenue that I would strongly urge people to look at for the totality of their fixed income portfolio.

John

Yeah, I appreciate that, Matt. I've shared with our audience quite a bit that our business consultants, our website, and our investment consultant team are all resources that are here to help them grow their business. So I'm glad—thank you for saying that. I appreciate it.

Well, Matt, I want to thank you for being on the podcast. This was really insightful. It's great to get a glimpse behind the scenes on how things work and hear about the conversations that you're having with financial advisors. So thank you.

Matt

Thank you, John, appreciate the opportunity.

John

You got it. Folks, as always, if you want to hear more, please subscribe to the Portfolio Intelligence podcast, wherever you find your favorite podcast. And to hear more, visit our website. You can get up to speed info on what's going on in the market, some great business building ideas. And much, much more. Thanks for listening to the show.

John

This podcast is being brought to you by John Hancock Investment Management Distributors LLC, member, FINRA, SIPC. The views and opinions expressed in this podcast are those of the speaker, are subject to change as market and other conditions warrant, and do not constitute investment advice or a recommendation regarding any specific product or security. There's no guarantee that any investment strategy discussed will be successful or achieve any particular level of results. Any economic or market performance information is historical and is not indicative of future results, and no forecasts are guaranteed. Investing involves risks, including the potential loss of principal.