Star Players Have Upped John Hancock's Game
John Hancock continues to improve, but higher fees detract from the appeal of many funds.
About six years have passed since Canadian insurance company Manulife (MFC) purchased John Hancock Financial and began putting its stamp on the firm. Keith Hartstein, who came up through Hancock's marketing and sales division, assumed the role of president and CEO shortly after the deal closed. Hartstein inherited funds that were managed by in-house management teams with mixed results. Historically, the fund family's fixed-income lineup had been stronger than its equity offerings, which sported mediocre or subpar performance records. High manager turnover and relatively high fees were additional strikes against the firm. Hancock did, however, have a number of talented subadvisors running some of its funds, including Pzena Investment Management on John Hancock Classic Value (PZFVX), and Sustainable Growth Advisors, which runs John Hancock U.S. Global Leaders (USGLX).
Following the firm's 2004 sale, Manulife shifted the John Hancock funds toward a subadvised model. John Hancock's former in-house portfolio managers transitioned to MFC Global Investment Management, a Manulife subsidiary that subadvises a number of John Hancock funds. John Hancock can hire additional external subadvisors to run its remaining lineup, creating an open-architecture framework that allows the firm to choose the best managers available for its funds. With the new model, John Hancock continues to oversee the distribution, marketing, and operation of the funds.
Hancock's in-house managers at MFC now compete against external subadvisors to run Hancock's funds, and underperforming MFC strategies can be easily replaced. Hancock's lineup of subadvisors is impressive. Investors can gain access to other notable firms such as Grantham, Mayo, Van Otterloo & Co., Rainier Investment Management, and Robeco Boston Partners.
Jonathan Rahbar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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