John Hancock Investment Management is now part of the fast-growing actively managed fixed income ETFs by virtue of Wednesday’s debut of the John Hancock Corporate Bond ETF (JHCB).
“The new ETF is actively managed and seeks a high level of current income consistent with prudent investment risk. Under normal market conditions, it invests at least 80% of its net assets (plus any borrowings for investment purposes) in corporate bonds,” according to a statement. “The ETF is managed by Jeffrey N. Given, CFA, senior managing director and senior portfolio manager, and Howard C. Greene, CFA, senior managing director and senior portfolio manager, Manulife Investment Management.”
The federal government backstopping U.S. corporate debt during the height of the pandemic gave the bond markets a nice boost, and some hedge funds are expecting that the party isn’t over just yet. Some funds are doubling down on corporate bonds, particularly the riskier and longer duration variety.
“We’re excited about our product line expansion and thrilled to enter the fixed-income ETF space by offering expanded access to the investment expertise of Howard and Jeff and the fixed-income team,” said Andrew G. Arnott, CEO, John Hancock Investment Management and head of wealth and asset management, Manulife Investment Management, United States and Europe. “This is the first ETF managed by Manulife Investment Management to be distributed in the U.S. and represents a new opportunity for investors who are familiar with our fixed-income management capabilities but prefer the ETF wrapper.”
Choosing an Active Bond ETF
Bond funds hold a collection of debt with varying maturities, buying and selling debt securities to maintain their short-, intermediate-, or long-term strategies. When it comes to bond ETFs, investors should look at the duration, or a bond fund’s measure of sensitivity to gauge their investment’s exposure to changes in interest rates – a higher duration means higher sensitivity to shifts in rates.
“We continue to see demand from ETF investors who would like additional tools to be more granular in this environment to maintain diversification and manage risk in their portfolios,” added Steven L. Deroian, co-head of retail product, John Hancock Investment Management. “JHCB gives investors this access in an actively managed ETF focused on investment-grade corporate bonds.”
JHCB charges 0.29% per year, or $29 on a $10,000 investment. That’s fair among active fixed income ETFs.
Boston-based John Hancock also filed plans for the John Hancock Mortgage Backed Securities ETF and John Hancock Ultra Short Income ETF.
For more news, information, and strategy, visit the Active ETF Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.