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Important Notes:

    Manulife Global Fund – Global Multi-Asset Diversified Income Fund ("Manulife Global Multi-Asset Diversified Income Fund" or "the Fund")

    1. The Fund invests in a diversified portfolio of equity, equity-related, fixed income and fixed income-related securities of companies and/or governments globally (including emerging markets), which exposes investors to fixed income and equity (including REITs) market risk, and geographic concentration and currency risk.

    2. The relevant distributing class of the Fund does not guarantee distribution of dividends, the frequency of distribution and the amount/rate of dividends. Dividends may be paid out of income, realized capital gains and/or out of capital of the Fund in respect of Inc share class(es). Dividends may be paid out of realized capital gains, capital and/or gross income while charging all or part of their fees and expenses to capital (i.e. payment of fees and expenses out of capital) in respect of MDIST (G) and R MDIST (G) share class(es). Dividends paid out of capital of the Fund amounts to a return or withdrawal of part of the amount of an investor’s original investment or from any capital gains attributable to that original investment and may result in an immediate decrease in the net asset value per share in respect of such class(es) of the Fund.

    3. The Fund invests in emerging markets, which may involve increased risks and special considerations not typically associated with investment in more developed markets, such as likelihood of a higher degree of volatility, lower liquidity of investments, political and economic uncertainties, legal and taxation risks, settlement risk, custody risks and currency risks/control.

    4. The Fund’s investment in fixed income and fixed income-related securities, as well as cash and cash equivalents, is subject to high yield bonds risk, credit/counterparty risk, interest rate risk, sovereign debt risk, valuation risk and credit rating and downgrading risk.

    5. The Fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes. The use of FDIs exposes the Fund to additional risks, including volatility risk, management risk, market risk, credit risk and liquidity risk.

    6. Investment involves risk. The Fund may expose its investors to capital loss. Investors should not make decisions based on this material alone and should read the offering document for details, including the risk factors, charges and features of the Fund and its share classes.

    7. Given RMB is currently not a freely convertible currency, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB. As offshore RMB (CNH) will be used for the valuation of RMB denominated Class(es), CNH rate may be at a premium or discount to the exchange rate for onshore RMB (CNY) and there may be significant bid and offer spreads and thus the value of the RMB denominated Class(es) will be subject to fluctuation. Any devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated Class(es) of the Fund.

     

    Manulife Global Fund – Preferred Securities Income Fund ("Manulife Preferred Securities Income Fund" or "the Fund")

1. The Fund invests primarily in preferred securities listed or traded on any regulated market in the world, including preferred stocks (including convertible preferred stocks) and subordinated debt securities, which exposes investors to fixed income and equity market risk, volatility and liquidity risk and currency risk. As the Fund may carry significant exposure to US-related issuers it may expose investors to geographical concentration risk.

2. The relevant distributing class of the Fund does not guarantee distribution of dividends, the frequency of distribution and the amount/rate of dividends. Dividends may be paid out of income, realized capital gains and/or out of capital of the Fund in respect of Inc share class(es). Dividends may be paid out of realized capital gains, capital and/or gross income while charging all or part of their fees and expenses to capital (i.e. payment of fees and expenses out of capital) in respect of MDIST (G) and R MDIST (G) share class(es). Dividends paid out of capital of the Fund amounts to a return or withdrawal of part of the amount of an investor’s original investment or from any capital gains attributable to that original investment and may result in an immediate decrease in the net asset value per share in respect of such class(es) of the Fund.

3. The Fund’s investment in fixed income and cash and cash equivalents is subject to credit risk, interest rate risk, credit rating and downgrading risk and high-yield bonds risk.

4. The Fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes. The use of FDIs exposes the Fund to additional risks, including volatility risk, management risk, market risk, credit risk and liquidity risk.

5. Investment involves risk. The Fund may expose its investors to capital loss. Investors should not make decisions based on this material alone and should read the offering document for details, including the risk factors, charges and features of the Fund and its share classes.

6. Given RMB is currently not a freely convertible currency, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB. As offshore RMB (CNH) will be used for the valuation of RMB denominated Class(es), CNH rate may be at a premium or discount to the exchange rate for onshore RMB (CNY) and there may be significant bid and offer spreads and thus the value of the RMB denominated Class(es) will be subject to fluctuation. Any devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated Class(es) of the Fund.

     

    Manulife Global Fund – USD Income Fund ("Manulife USD Income Fund" or "the Fund")

    1. The Fund invests primarily in fixed income securities and fixed income related securities denominated in U.S. Dollar of issuers globally. In meeting its investment objective, the Fund may invest more than 30% of its net assets in issuers located in the United States, which may involve geographical concentration, collateralized/securitised products, sovereign debt, convertible securities, subordinated debt, high-yield bonds, liquidity, credit downgrade, interest rate, credit and rating of investment risks and risks associated with investments in debt instruments with loss-absorption features (including Contingent Convertible Debt Securities).

    2. The relevant distributing class of the Fund does not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. Dividends may be paid out of income, realized capital gains and/or out of capital of the Fund in respect of Inc share class(es). Dividends may be paid out of realized capital gains, capital and/or gross income while charging all or part of their fees and expenses to capital (i.e. payment of fees and expenses out of capital) in respect of MDIST (G) and R MDIST (G) share class(es). Dividends paid out of capital of the Fund amount to a return or withdrawal of part of the amount of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate decrease in the net asset value per share in respect of such class(es) of the Fund.

    3. The Fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes. The use of FDIs exposes the Fund to additional risks, including volatility risk, management risk, market risk, credit risk and liquidity risk.

    4. Investment involves risk. The Fund may expose its investors to capital loss. Investors should not base on this material alone to make investment decisions and should read the offering document for details, including the risk factors, charges and features of the Fund and its share classes.

     

    Manulife Global Fund – Asia Pacific REIT Fund ("Manulife Asia Pacific REIT Fund" or "the Fund")

    1. The Fund invests primarily in equities and equity-related securities in the Asia Pacific ex-Japan region, which exposes investors to equity market risk as well as geographic concentration and currency risk.

    2. The relevant distributing class of the Fund does not guarantee distribution of dividends, the frequency of distribution and the amount/rate of dividends. Dividends may be paid out of income, realized capital gains and/or out of capital of the Fund in respect of Inc share class(es). Dividends may be paid out of realized capital gains, capital and/or gross income while charging all or part of their fees and expenses to capital (i.e. payment of fees and expenses out of capital) in respect of MDIST (G) and R MDIST (G) share class(es). Dividends paid out of capital of the Fund amounts to a return or withdrawal of part of the amount of an investor’s original investment or from any capital gains attributable to that original investment and may result in an immediate decrease in the net asset value per share in respect of such class(es) of the Fund.

    3. The Fund invests in real estate investment trusts (“REITs”), which may expose investors to sector concentration and real estate-related risks.

    4. The Fund intends to use financial derivative instruments (“FDIs”) for investment, efficient portfolio management and/or hedging purposes. The use of FDIs exposes the Fund to additional risks, including volatility risk, management risk, market risk, credit risk and liquidity risk.

    5. Investment involves risk. The Fund may expose its investors to capital loss. Investors should not make decisions based on this material alone and should read the offering document for details, including the risk factors, charges and features of the Fund and its share classes.

    6. Given RMB is currently not a freely convertible currency, payment of redemptions and/or dividend payment in RMB may be delayed due to the exchange controls and restrictions applicable to RMB. As offshore RMB (CNH) will be used for the valuation of RMB denominated Class(es), CNH rate may be at a premium or discount to the exchange rate for onshore RMB (CNY) and there may be significant bid and offer spreads and thus the value of the RMB denominated Class(es) will be subject to fluctuation. Any devaluation of RMB could adversely affect the value of investors’ investments in the RMB denominated Class(es) of the Fund.

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Fund positioning update on US Fed rate cut

19 September 2024

 

The US Fed has lowered its benchmark rate by 50bps to 4.75%-5.0% at the September meeting. This may be signaling the era of easing has begun. How does our funds position respond to market conditions and help investors seek opportunities?

Manulife Global Multi-Asset Diversified Income Fund 

With a globally diversified, unconstrained portfolio of 800 names1, we believe the Fund is well prepared to manage global market rate cycles and maintain a high income payout level.

  • Equity: Equity holdings are globally diversified with a blended style across Value and Growth, and no one style bias dominating returns. Riding on the market volatility in August, the Fund reduced its underweight to the tech sector and selectively added some consumer discretionary and health care names. Overall, the equity sleeve maintained sector diversification, with overweight exposure towards Consumer Discretionary and Health Care, well positioned to capture a broader market return beyond just tech/comm services and mitigate the sector-driven volatility. In addition, the team has also added more diversified international ex-US names in July to manage a heavy US exposure and lower the valuation profile of the equities in the portfolio.
  • Fixed income: The fixed income sleeve is credit focused, naturally lower duration given high yield exposure, less duration sensitive whilst more credit sensitive towards the prospects of recession / default risks which have been moderating. This year the team has added exposure to investment grade space including preferreds as well as selective BB rated credit names to increase the defensiveness and lock in the yield before the Fed pivot. The team has been underweight CCC rated credit within high yield which has helped manage recent market volatility. We believe the portfolio will benefit from falling rates as high yield and preferred securities tend to thrive in falling rate environments. In addition, the team do not anticipate broad spread opportunities in the US but sees spread opportunities across emerging markets and Asia credits. A soft landing scenario may support EM and Asia credits to outperform particularly Asia credit due to attractive valuations and strong fundamentals. To conclude the team is prepared for rates to fall while being defensively positioned for an increase in market volatility.
  • Option writing: Persistent option writing implementation shows its strength during uncertain market conditions – writing index level calls and put options to enhance yield generation to offset against drawdowns in other parts of the portfolio. If rate cuts are as expected, without being proximate to a market scare, we believe option implied volatilities will remain low, and correlation low. If data forces the US Fed to cut more aggressively, we expect premiums to rise somewhat.

Manulife Preferred Securities Income Fund

With an average investment grade portfolio, the Fund aims to deliver consistent income with the flexibility to manage interest rate and economic cycles via a broad range of preferreds. We believe the Fund is well positioned for interest rate cuts and is prepared for market cycles:

  • Downside protection: We remain defensively positioned, overweight to natural gas and electric utilities – areas that offer downside protection amid periods of volatility and uncertainty. These sectors have produced significantly lower levels of volatility with the most substantial returns.
  • Flexibility: Another area of significant differentiation is investing up and down a company’s capital structure, depending on a combination of relative valuations and economic cycles. For example, the Fund could increase subordinated notes, or baby bonds, under a slower growth environment as they are the highest quality preferreds.
  • Duration: The fund will benefit from falling rates as preferreds thrive in falling rate environments. In particular, we have increased our preferred stock allocation, which possesses longer duration profiles and trades at deeper discounts relative to institutional par. As of Aug 2024, the portfolio duration was about 4.13 years, near the highest level since late 2020. The latest yield of AA (USD) MDIST (G) share class remains compelling at 7.26%2.

Manulife USD Income Fund

The Fund aims to achieve stable income and returns by diversifying into more than 700 holdings with an average A+ credit rating. By combining the Opportunistic Credit, Securitized and US Government Bonds allocations, our dynamic asset allocations could help manage market cycles by identifying compelling opportunities based on evaluations of relative risk and return characteristics. We believe the portfolio is well positioned for the Fed rate cut cycle and could help weather the heightened market volatility.

  • Income: Investing in opportunistic credit sectors to enhance portfolio yield through a combination of traditional (e.g. UST/IG Corp) and non-traditional (e.g. preferred securities) income sources. The Fund’s portfolio yield has been enhanced after the repositioning to strategically increase the preferred securities exposure, with the latest yield of AA (USD) MDIST (G) share class at 6.48%2.
  • Unconstrained approach: A flexible fixed-income mandate focusing on US Government bonds, securitized assets, and credit. The team will be overweight and underweight in each area based on economic cycles. For example, the Fund could increase HY Corp/preferred stock exposure during risk- on market environment and add US Treasury/IG Corp during risk-off sentiment.
  • Duration: maintaining a duration-neutral approach has led to a steady return stream, unlike peers who have moved duration around (unsuccessfully) based on Fed rate cut expectations. For example, at the end of 2023 the market priced in 6.3 cuts for the year. Today, the market is pricing in 4.4 times of 25bps cut from 1.8 in June. Incorrect bets on the number of rate cuts could potentially drag down portfolio returns.

We continue to position the strategy defensively in corporate credit with emphasis on financials and utilities, though with an eye toward relative value opportunities at the individual security level. The strategy also remains materially overweight in government agency residential mortgage-backed securities offering attractive values.

Manulife Asia Pacific REIT Fund3

Underpinned by a consistent focus on high quality REITs and diversified allocation across “new and traditional economy” REITs, the Fund remained well positioned amid a lower rate environment and should continue to deliver sustainable dividend payout, which should help investor manage volatility.

  • Lower interest costs: A rate cut is expected to be a macro tailwind for Asia REITs, as it should ease refinancing pressures which has been an offsetting factor to strong operational performance from REITs over the past two years. We see an increasing number of REITs with marginal cost of debt trading below prevailing debt cost on their books, which is a harbinger of lower interest costs.
  • DPU growth & accretive asset acquisitions: We are incrementally more positive and see brighter prospects for the sector in the coming year given potential for y-o-y growth in distribution going into 2025. Also, there is a greater opportunity for accretive asset acquisitions as spreads between cap rates and financing costs widen (in some cases, the spread moves back into positive territory). With lower financing cost and lower long-term yields, pressure on cap rates expansion will also ease and capital values of commercial assets would stabilise.
  • Fund positioning: Year to date, the Fund has enhanced income resilience by increasing position in suburban/necessity retail REITs across the region. We believe the defensive operating fundamentals should continue to support long term distribution payouts for investors. The Fund added data center and “new economy” industrial REITs, given the resilient cashflows and favorable supply-demand imbalance. Additionally, the Fund selectively added into names in ASEAN region to capture growth potential across the region. We continue to seek opportunities and focus on paying reasonable valuations for high quality Asia REITs.

 


1. Source: Manulife Investment Management, Barclays Point, as of 31 Aug 2024. Information about the asset allocation and portfolio holdings is historical and is not indication of the future composition. Diversification or asset allocation does not guarantee a profit nor protect against loss in any market. The above yield does not represent the distribution yield of the Fund and is not an accurate reflection of the actual return that an investor will receive in all cases.

2. Source: Manulife Investment Management, as of 3 September 2024. Distribution yield applies only to AA (USD) MDIST (G) Share class. Dividend rate is not guaranteed. Dividends may be paid out of capital. Refer to important note 2. Please note that a positive distribution yield does not imply a positive return. Past performance is not indicative of future performance. Annualised yield = [(1+distribution per unit/ex dividend NAV)^distribution frequency]–1, the annualised dividend yield is calculated based on the latest relevant dividend distribution with dividend reinvested, and may be higher or lower than the actual annual dividend yield. Diversification or asset allocation does not guarantee a profit nor protect against loss in any market.

3. The Fund is authorised by the Securities and Futures Commission of Hong Kong (“SFC”). SFC’s authorisation of the fund is not made under the Code on Real Estate Investment Trust and does not imply official recommendation.

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  • The Fed starts easing: Potential tailwinds for high-quality US credits

    Our analysis shows that US IG credits and preferred securities have historically performed well following US Federal Reserve (Fed) rate cuts. We maintain our favourable view of asset classes that offer unique investment opportunities for fixed-income investors looking for potentially attractive returns.

    Read more
  • The Fed’s rate decision: Not so surprising, but what’s the path forward?

    We see three important themes worth highlighting now that the Fed’s easing cycle is finally underway.

    Read more
  • Better income – Preferred securities

    Over the past three years, preferred securities showed slightly higher volatility than US Treasuries, but less volatile than other rate-sensitive assets like US mortgage-backed securities (MBS) and US investment-grade bonds. Preferreds also demonstrated a relatively better return than US Treasuries, MBS and investment-grade bonds.

    Read more
See all