John Hancock Preferred Income ETF

JHPI

Market cap $212M

The John Hancock Preferred Income ETF outperformed its benchmark, the ICE BofA U.S. All Capital Securities Index, during the first quarter. The fund's security selection within the communications and electric utility sectors was the primary contributor to outperformance, while an allocation to swap instruments offset these gains. The successful positioning in preferred securities from major financial institutions undergoing transformative mergers, including Fifth Third Bancorp and Pinnacle Financial Partners, contributed meaningfully to performance.

The U.S. bond market rose in the third quarter due to falling bond yields. The fund outperformed its benchmark, the ICE BofA U.S. All Capital Securities Index. Security selection within the electric utility sector was the primary contributor to outperformance, while an underweight allocation to the insurance sector was the main detractor.

The U.S. bond market declined in Q4 2024 as bond yields rose sharply despite Fed rate cuts, driven by strong economic data and geopolitical factors. The John Hancock Preferred Income ETF outperformed its benchmark due to strong security selection in the banking sector and preferred stock, but underperformed in the communications and energy sectors. Opportunities exist in lower capital structures of high-quality businesses for income generation and capital preservation, with a preference for defensive sectors like electric utilities.

PFFA is a well-diversified and consistently top-performing preferred stock ETF, enabled by management's bold allocation strategy.