Manulife Investment Management – Latest Asset Class Outlook

October 2024

Asset Allocation Views^#

Key Global Themes

1. Monetary policy is easing, but how far and fast it goes is the question

The US Federal Reserve (Fed) has definitively shifted from its sole focus on inflation to also supporting full employment. As such, with jobs and economic growth cooling, we expect a faster pace of easing than what the Fed has telegraphed. We see a Fed funds rate of 4.25% at the end of 2024 and 3.00% at the close of 2025.
This clearer policy path could result in a more synchronous global easing cycle as a weaker US dollar prompts rate cuts from central banks—particularly in emerging markets (EM) —that have been somewhat constrained from easing by recent US dollar strength.
That said, specific factors are still at play for many policymakers. The European Central Bank and Bank of England are contending with stubborn inflation, while the Bank of Canada faces sluggish domestic demand and the possibility of weak inflation. The Bank of Japan has actually raised rates twice this year, and Brazil Central Bank has increased rates due to inflation. Among other emerging markets, Bank Indonesia has begun cutting rates as the Rupiah stabilizes against the US dollar.

2. United States: regardless of the landing, we’re likely to experience turbulence on the way down

For months, there has been a debate about whether the US economy would experience a hard landing, a soft landing, or no landing at all. We’ve maintained that no slowdown is highly unlikely given the massive monetary policy tightening of the past two years. Recent US data has however broadly shown strength, which has seen yields rise and dollar strength. This move in yields is partly to reflect the market’s view of less aggressive cuts to come than previously thought, or anticipation of a Trump election win which could be seen as policy being more inflationary
Outside of household consumption, most sectors of the US economy have slowed, including housing, business investment, and international trade. We also see limited upside potential for consumption: With labour demand slowing, we expect a moderate hit to income and consumer confidence, which would ultimately weigh on households’ ability to spend.
The question now is whether the US slowdown will be limited to a modest deceleration or a more pronounced deterioration. So far, the data has moderated at a reasonable pace. If a more benign business environment unfolds, easier monetary policy should ultimately be a positive for risk assets. There is, however, an important caveat: We DO expect volatility around disappointing macroeconomic data as markets adjust to the odds of a weak growth environment. Furthermore, should inflation come back, this would complicate the current Fed guidance to markets.

3. Global economies have already softened; the global trade cycle will become an important theme

While the discussion around whether or not the United States can stick the landing is alive and well, we would note that large parts of Europe, the United Kingdom, Japan, Canada, and China have all experienced underwhelming, and comparatively weaker, growth at various points over the last six quarters.
With the United States slowing, we expect global trade volumes will continue to slow–an outcome already reflected in business surveys such as global PMIs. This is especially the case given the limited scope from China for improved domestic demand compounding any global slowdown. Consequently, any country-level assessment should include careful consideration of its exposure to the global trade impulse.
Given the divergence in policy and macroeconomic data across economies, it's essential to maintain vigilance and carefully review portfolio positioning on a regular basis.

Equities

Broad Equity:

We’ve shifted from an underweight to a neutral position in Canadian equities due to improving earnings growth and attractive valuations compared to other developed markets. The Bank of Canada’s dovish stance on rate cuts could be the potential catalyst for these benefits.
While we remain overweight in US equities—supported by positive earnings growth and an easier Fed policy—the magnitude of this overweight position has moderated compared to our stance last quarter, as growth has slowed relative to other developed markets.
While equities outside North America benefit from attractive valuations, well-contained inflation and gradual growth recovery, their weak earnings outlooks, alongside international and domestic political headwinds, warrant a neutral stance.

Regional/Sector-specific Equity:

Our view on U.K. equities remains neutral but is leaning more positive due to historically low valuations, attractive yields, and improving growth. Despite structural post-Brexit challenges and policy uncertainty, the economic recovery appears more resilient compared to the euro area, and recent capital flows have turned positive.
We maintain our overweight stance in Japanese equities given their improving fundamental outlook, reasonable valuations, and positive corporate governance reforms. Over the short term, we believe yen appreciation will temper some outperformance of the asset class and add to volatility.
Our view in Chinese equities remains neutral, as we acknowledge their compelling valuations and intensified policy efforts to thwart ongoing deflationary forces. However, weakness in real estate and domestic consumption alongside a lack of substantial fiscal stimulus are headwinds for Chinese equities. As such, much of our positioning is biased to the downside.
We've upgraded Asia-Pacific ex-Japan to overweight as we see relative investment opportunities in select countries, which are likely to benefit from a manufacturing recovery and accelerated rate cuts following the Fed's easing path.
Despite improved valuations, we’ve shifted our view from overweight to neutral in commodities, as concerns from both the demand and supply sides present near-term risks.

Fixed Income

We remain neutral in investment-grade debt as we believe the tightness of current spread levels doesn't provide ample cushion in the face of a credit risk event.
We favour leveraged loans over US high yield as they can offer more attractive spread and yield carry, providing a better risk/reward balance. Leveraged loans issuers have adjusted to higher short-term rates compared with bond issuers.
Within Asia, we prefer high-yield credits over investment-grade credits due to their more attractive valuations and favourable spreads compared to historical averages. Additionally, default rates are likely to normalize following years of credit stress. Non-China high-yield credits present resilient and solid credit fundamentals.
We still maintain an overweight stance in emerging-market debt due to the potential for EM currencies to appreciate if the Fed delivers on cuts. That said, spreads have tightened, and future downward revisions could be possible.

Building a little defense into portfolios

While global monetary easing should provide continued growth opportunities across equities and fixed income, current valuations and continued geopolitical uncertainty are burnishing the appeal of defensive plays.
At a time when we’re seeing peak-level U.S. equity valuations, tight credit spreads, continued uncertainty in the geopolitical environment, and wider dispersion in markets, there is value in taking a more cautious approach. That said, we believe opportunities still exist across both equities and fixed income.
Within the United States, there is an opportunity for healthcare and financials, and we still feel the large-cap growth story has some legs. Japan is enjoying improving fundamentals and reasonable valuations, and it stands to benefit from positive corporate governance reforms. Outside of Japan, Asia-Pacific is well-positioned as a defensive play within a slower growth, manufacturing-led world.
In fixed income, we continue to shift our preference toward high-quality investment-grade credit, and we see the appeal floating-rate fixed income over high-yield bonds. Lastly, while we've cooled somewhat on broader commodities, exposure to gold remains appealing due to geopolitical uncertiainty and favourable suply-demand dynamics.

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Quarterly Fund Managers’ Views

Below market views are provided by the respective fund house.

Equity

Manulife Japan Equity Strategy

Japan equities¹ rose 2% over the quarter in JPY terms, but declined 1% in USD terms. The yen continued to weaken over the quarter as the Bank of Japan maintained its loose monetary policy stance while US treasury yields rose higher. Markets globally were affected by both rising bond yields and concerns over China’s economic outlook putting the brakes on strong performances in the first half of the year.

Japan remains the outlier in global markets for maintaining its loose monetary policy, but with rising inflation rates (over 4% for core CPI, excluding energy and fresh food), we believe that the Bank of Japan will come under increasing pressure to begin the process of normalizing monetary policy. In July, the Bank of Japan made a tentative move by raising its yield curve control on 10 year JGBs from 0.5% to 1.0%, but markets were initially unconvinced about its intention to take any further action this year. Since then, the 10 year yield has slowly risen from 0.4% to 0.8% and the Bank of Japan may be moving closer to remove negative interest rates at the short end. This scenario is positive for Japanese financials, which outperformed over the quarter.

With price increases now becoming more commonplace in Japan after decades of deflation, it is more important than ever to focus on companies which have strong pricing power and are able to raise prices in this inflationary environment. Our strategy’s focus on companies with a history of strong pricing power and efficient allocation of capital should provide a platform for outperformance in the current environment. Recent examples of pricing power amongst the portfolio’s holdings include increase in subscription pricing in a Japanese multinational conglomerate corporation’s Entertainment Business, strong demand for a Japanese drugstore chain’s private label cosmetics and large price increases in garage doors and factory shutters in a Japanese shutter & door manufacturer’s US business.

Another leg to Japan’s equity market recovery has been its increasing focus on more efficient use of capital and in many cases, this has meant a significant improvement in shareholder returns, especially in the form of share buybacks. The strategy is focused on finding companies whose management are willing to return excess capital to shareholders when potential returns on new investments do not exceed their cost of capital. For instance, a leading Japanese life insurance company has recently begun its second large share buyback program, which has proven to be a support to the share price over the quarter.

Japan remains one of the cheapest developed markets trading on a price to earnings (PE) multiple that is 25% cheaper than S&P500 (based on Bloomberg consensus for 2023). The weak yen will support earnings growth in 2023, which will help to support valuations. We continue to see improvements in Japan’s ROE driven by improving capital efficiency, which we see as a further catalyst for the market to outperform its global peers over time.

1 Bloomberg, Japan equities represented by TOPIX Index.

abrdn Global Dynamic Dividend Strategy

Equity Dividend strategies have a reputation for providing attractive long-term risk-adjusted returns due to their defensive advantages below, which may be particularly well-suited to the prevailing global economic environment of slowing growth, elevated inflation, and higher interest rates.

Superior long-term returns with lower drawdown in down markets: Over the last 20 years, companies that have initiated or consistently grown their dividends (‘Dividend Growers’) have comfortably outperformed the broader global index, companies with stable dividend payout without growth (‘No Change Dividend Payers’), companies without paying dividend (‘Non-Dividend Payers’) and companies that have cut or eliminated dividends (‘Dividend Cutters’).

Indeed, the ability to pay dividends regularly, and to grow dividends, has widely been seen as an indicator of reliable earnings quality and growth. In more challenging economic environment, equity investors tend to prefer stocks with increased certainty of dividend payments (which are inherently less risky and volatile than capital gains), and those with up-front cashflows, which offer valuable downside protection due to significantly lower drawdowns in down-market periods.
Lower volatility: Annualized return volatility of Dividend Growers is distinctly lower than that of Non-Dividend Payers and Dividend Cutters.
Inflation-protected income: Income from equity dividends has advantages compared to coupons from bonds. Albeit with more risk, equities typically offer greater upside potential from price appreciation. Besides, unlike bonds and other investments with a fixed coupon, companies could increase their dividend payments over time. As such, companies that increase dividends in inflationary environments can potentially provide inflation-hedged income opportunities.
Diversification: The abundance of dividends across sectors means there is also ample scope for diversification. The global equities market is especially well diversified across sectors and more so than some regional markets, which supports the case for a global approach to dividend investing.

In summary, we believe the long-term case for dividend growth-focused investing in global equities is empirically well-grounded. Such an approach may appeal especially to equity investors, but with a greater degree of built-in resilience. However, from a more tactical perspective too, we believe that today’s economic backdrop (of high inflation, higher interest rates and weaker growth) appears well-suited to a dividend growth-focused strategy in global equities.

Important information

Source: abrdn, Factset. Data from 31/12/2002 to 31/12/2022. Historical compounded returns (%) of dividend categories and standard deviation (%). The investment universe is the MSCI All Country World Index, using annual income class returns. Dividend policy constituents are calculated on a rolling 12-month basis and are rebalanced annually. Category returns are calculated on a monthly basis. Index returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and cannot be invested in directly.

For illustrative purposes only. Past performance is not indicative of future returns.

Dividend policy categorisation explanation: The ‘Dividend Growers’ category represents performance for companies which either increased or initiated dividend distributions. The ‘No Change Dividend Payers’ category represents performance for companies which pay a dividend but have neither increased nor decreased their dividend distribution. The ‘Dividend Cutters’ category represents performance for companies which have either cut or eliminated their dividend distribution.

Global Equities Market is represented by the MSCI All Country World Index. Source: MSCI AC World Index factsheet, March 2023

This document is strictly for informational purposes only and does not constitute an offer to sell, or solicitation of an offer to purchase any security, nor does it constitute investment advice, investment recommendation or an endorsement with respect to any investment products.

Investment involves risk. The value of investments and the income from them can go down as well as up and investors may get back less than the amount invested. Past performance is not a guide to future performance. No liability whatsoever is accepted for any loss arising from any person acting on any information contained in this document

Any data contained herein which is attributed to a third party (“Third Party Data”) is the property of (a) third party supplier(s) (the “Owner”) and is licensed for use by abrdn**. Third Party Data may not be copied or distributed. Third Party Data is provided “as is” and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, abrdn** or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Neither the Owner nor any other third party sponsors, endorses or promotes the fund or product to which Third Party Data relates.

**abrdn means the relevant member of abrdn group, being abrdn plc together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time.

This document is issued by abrdn Hong Kong Limited and has not been reviewed by the Securities and Futures Commission.

Fixed Income

Manulife Preferred Securities Income Strategy

US Treasury yield continued its upward trajectory in Q3 2023 as economic data came in stronger than expected, including robust consumer spending figures and a resilient labor market. The benchmark 10-year government bond yield ended the quarter at 4.57%, the highest level since 2007¹.

US fixed income markets were under pressure due to the rising yield in Q3 with US HY Corp being the exception, as they benefited from the strong economic data. Preferreds declined alongside broad bond markets during the quarter but remained outperforming US IG Corp and US Treasury on a year-to-date basis¹.

We maintain a favorable view of preferred securities as significantly improved yields should lead to attractive forward returns. Ability to select securities from a broader credit universe and across the capital structure will help navigate the softening landscape and focus on risk-adjusted returns.

The investment team continues their defensive position stance since 2019. In addition, the strategy has positioned for a rising yield environment and remained underweight duration compared to the preferred market², meaning the strategy was relatively less sensitive to interest rates.

With an average investment grade credit rating of BBB- and about 90% of issuers being rated as investment grade², preferred securities are relatively high-quality assets and subject to less credit risks compared to HY Corp. We believe preferreds are well positioned to help buffer any economic slowdown, apart from providing income potential and interest rate risk mitigation.

1 Bloomberg, as of 30 September 2023. Preferreds are represented by ICE BofA US All Capital Securities Index; US HY Corp are represented by ICE BofA US High Yield Index; US IG Corp are represented by ICE BofA US Corporate Index; US Treasury are represented by ICE BofA US Treasury & Agency Index. For illustrative purposes only. Past performance is not an indication of future results.

2 Bloomberg, Manulife Investment Management, as of 30 September 2023. Preferred securities are represented by ICE BofA US All Capital Securities Index. For illustrative purposes only. Past performance is not indicative of future performance.

PIMCO Asia High Yield Bond Strategy

We believe economic growth in many Asian markets will remain resilient in 2023 as the recovery from COVID-19 continues. Performance in Asia high yield may be uneven with differentiation in fundamentals likely to continue, highlighting the importance of active credit selection. We continue to maintain a focus on a high quality and diversified portfolio, and choose to not stretch for yields.

We are constructive on the Macao gaming and India renewable energy sectors due to recovery and policy tailwinds, but we have lesser allocations to select financial sectors in Asia due to unfavorable relative valuations. We are seeing pockets of opportunities in the India renewable energy sector, which benefits from India’s strong power demand growth, favorable regulatory environment, cost competitiveness, and ESG tailwinds.

China’s slowing growth momentum and weak property market create downside risks. We are maintaining a cautious and selective stance towards the China property sector. While their valuations are attractive, the continued volatility, funding challenges, and weaker fundamentals are potential risks. We are focusing on developers with adequate internal resources or ability to obtain alternative funding channels to address liquidity needs. One key challenge facing the sector is how to revive sentiment for the property market. An overall improvement in income expectations and property easing is needed to stabilize the property market. We continue to be underweight the China banking sector, partly due to relatively tight valuations, and are finding better value in other global banks.

Asia credit valuations remain attractive, but there could potentially be more volatility ahead. With a current spread over Treasuries (SOT) of 1023bps, Asia high yield continues to trade relatively wide with a 611bps and 542bps premium over U.S. and global high yield respectively. Technicals remain supportive as we expect negative net financing for 2023 amid flush onshore liquidity.

Source: PIMCO, as of 30 September 2023.

All investments contain risk and may lose value. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.

PIMCO Asia Limited is licensed by the Securities and Futures Commission. | No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America LLC in the United States and throughout the world. ©2023, PIMCO.

Multi-Asset

Manulife Global Multi-Asset Income Strategy

The current tightening cycle in advanced economies is already the most aggressive in decades and central banks are continuing down their path of rate hikes, albeit we believe we are close to Fed peak rates. Hawkish language suggests the possibility of further hikes remain on the table, even as ramifications for the global economy continue to unfold. Key to central bank decision making is the persistence of inflation, which has shown signs of moderation but remains too high relative to their stated goals. There is two-sided and substantial risk around central bank outlooks, and the slow improvement in inflation injects a non-negligeable risk of continued further tightening that we feel is underappreciated in markets. Bond yields continue to push higher on the Fed factor, and due to higher oil prices, which could lead to an uptick in inflation towards year end.

Our framework for the Fed outlook remains intact with our forecasts having a 5.5% peak Fed Funds rate. Our base case is that most central banks are now either finished or close to completing their rate hike cycle, though action remains desynchronized. Pockets of resilient macro is prolonging a pivot from the Fed to ease. We remain confident that we get a deterioration in growth. We are forecasting recessionary conditions to envelop much of the globe albeit we believe the recession has been postponed rather than cancelled, with expectations of continued near-term market volatility. Continued tight financial conditions, slowing manufacturing production, a negative consumer wealth effect, and ongoing fiscal drags are all important headwinds to growth. However, the exact timeline for this decline is unknown given now-positive real wages, continued full employment, residual benefits from fiscal stimulus and residential construction could all provide support to GDP for a few more quarters. Against that backdrop, we see material risks around the timeline for when the Fed might cut, which would leave the Fed at peak policy rates for longer than our base case would suggest.

In markets, an uncertain macroeconomic landscape is a potential headwind for equities. That said, corporate earnings have remained strong, outpacing expectations. Given the uncertainty surrounding several factors—among them monetary policy, corporate earnings, geopolitical tensions, and recessionary risks—we are focusing on quality across equity assets and taking a more defensive position. At the same time, we appreciate the excitement surrounding AI and the magnitude of its potential impacts on revenue monetization, productivity, and cost cutting, and seek pockets of related growth opportunities.

High yield bonds and loans, and spread sectors more broadly, have continued to benefit from comparatively high levels of carry and current yield from a historical basis, and from positive investor sentiment and spread levels that have moved tighter year-to-date.

Companies of lower credit quality will have to carefully navigate worsening conditions compounded by increased required rates of return by financial markets. We have seen new issue activity pickup in the latter half of the third quarter, but from very weak levels recorded earlier in the year and in 2022. Default rates have also picked up, particularly for CCC rated issuers, and we believe this trend will likely continue, driven by a potentially weakening economy, a growing number of bonds maturing over the next few years, and restrictive refinancing rates facing many corporations.

Against this backdrop, the importance of security selection and differentiation among spread sector allocations and capital structures is at a premium as is preserving capital and limiting permanent capital losses due to defaults. Despite these challenges, we maintain a favorable medium-term view of the High Yield asset class and spread sectors more broadly as high absolute yields should help provide a buffer in the event that spreads do begin to widen. Having the ability to select securities from a broad credit universe and the flexibility to allocate across fixed income sectors and up and down the credit spectrum should also help with navigating a potentially softer economic landscape.

Tactical positioning will be more prevalent again into end of 2023, to be able to nimbly add and de-risk portfolios as well as add to yield opportunities as they arise. Overall, we are tilted towards higher for longer rates whilst seeing yields keeping contained given the potential for macro data disappointments. The portfolio aims to maintain a consistent payout with alongside a stable NAV, via asset allocation decisions and positioning aimed at mitigating some of the current headwinds.

BlackRock Dynamic High Income Strategy

Rising interest rates continued to weigh on markets in September with both risky and safe haven assets selling off. The Federal Reserve remained on hold at their September meeting, yet most voting members penciled in one additional rate hike in 2023 with markets also adjusting to reflect this potential reality in recent weeks. Similarly, rate cuts in 2024 have been pushed back as investors price in a higher for longer rate environment. Even though inflation has continued to moderate in the U.S. and Europe, rising oil prices, heavier treasury supply, and potential monetary policy changes in Japan have all been catalysts for rising bond yields. The result has been a challenged backdrop for both stocks and bonds since the end of July. Within equities, real estate and utilities sectors have been among the worst performers, while the energy sector has rallied. Across fixed income, duration sensitive sectors have struggled as the 10-year treasury yield hit its highest level since 2007. Conversely, credit fixed income sectors have continued to outperform, notably floating rate exposures that have benefited from higher coupons and limited duration risk.

Our base case remains that the U.S. economy will continue to moderate but avoid a hard landing scenario due to the relative health of consumers and corporates. A further drop in inflation should allow real income to rise across U.S. consumers, further supporting U.S. economic resiliency in our view. Additionally, we expect the job market to remain tight as evidenced by total nonfarm payrolls coming in significantly above expectations last month with upward adjustments in the prior two months as well. That said, we expect central banks to maintain a higher for longer stance as inflation is likely to stay above target for the foreseeable future. As we’ve seen in the last two months, higher rates can add significant volatility in markets and may impact the economic growth outlook should we see a further move up. Added uncertainty from conflict in the Middle East and the potential for higher oil prices means investors need to proceed with some caution.

In terms of recent positioning, we’ve taken steps to rotate away from high yield after it performed strongly in Q3 versus equities, choosing to own more to covered calls to take advantage of higher volatility and investment grade bonds to capitalize on higher yields from up-in-quality sectors. Overall, we remain measured in our approach given surging sovereign yields and the risk of a policy misstep.

Performance snapshots

Fund screener

#Source: Multi-Asset Solutions Team (MAST), as of 30 September 2024. Projections or other forward-looking statements regarding future events, targets, management discipline or other expectations are only current as of the date indicated. There is no assurance that such events will occur, and if they were to occur, the result may be significantly different than that shown here. Information about asset allocation view is as of issue date and may vary.1Active asset allocation views will be updated on a quarterly basis.

Disclaimer – Quarterly Asset Allocation Views

Manulife Investment Management is the global wealth and asset management segment of Manulife Financial Corporation. The information and/or analysis contained in this material have been compiled or arrived at from sources believed to be reliable but Manulife Investment Management does not make any representation as to their accuracy, correctness, usefulness or completeness and does not accept liability for any loss arising from the use hereof or the information and/or analysis contained herein. Neither Manulife Investment Management or its affiliates, nor any of their directors, officers or employees shall assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained herein.

This material was prepared solely for educational and informational purposes and does not constitute a recommendation, professional advice, an offer, solicitation or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security. Nothing in this material constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. The economic trend analysis expressed in this material does not indicate any future investment performance result. This material was produced by and the opinions expressed are those of Manulife Investment Management as of the date of this publication, and are subject to change based on market and other conditions. Past performance is not an indication of future results. Investment involves risk, including the loss of principal. In considering any investment, if you are in doubt on the action to be taken, you should consult professional advisers.

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The relevant information is prepared by relevant fund house(s) for information purposes only. The contents are based on information generally available to the public from sources reasonably believed to be reliable and are provided on an "as is" basis but have not been independently verified. Any projections and opinions expressed therein are expressed solely as general market commentary and do not constitute solicitation, recommendation, investment advice, or guaranteed return. Such projections and opinions are subject to change without notice and should not be construed as a recommendation of any investment product or market sector.

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The relevant distributing class of the sub-funds 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 certain sub-funds 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 these sub-funds 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 sub-funds.
Certain sub-funds invest in emerging economies or markets, where special risks, including liquidity, volatility, government policies, taxation, currency, currency repatriation, political and regulatory risks, may be substantially higher than the risks normally associated with more developed economies or markets.
Certain sub-funds invest in securities of small and medium sized companies in the relevant markets. This can involve greater risk than is customarily associated with investments in larger and more established companies.
Certain sub-funds concentrate their investments in a single country and/or a particular industry sector are subject to greater risks than diversified investments in several countries and/or regions and across sectors.
Certain sub-funds may invest directly in certain China A shares via Stock Connect, which may involve in risk related to Investments via Stock Connect and Mainland China investment.
Investment involves risk. The sub-funds may expose their investors to capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds and their share classes.
Each sub-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 counterparty/credit risk, liquidity risk, valuation risk, volatility risk and over-the-counter transaction risk.
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 certain sub-funds.

Manulife Advanced Fund SPC

Manulife Advanced Fund SPC is an umbrella fund comprising a number of sub-funds investing primarily in equity and bond securities, each of which has a different investment objective and risk level.
The sub-funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. A sub-fund may at its discretion pay dividend out of capital or gross income while charging / paying all or part of its fees and expenses out of its capital. This amounts to a return or withdrawal of part of an investor’s original investment or from any capital gains attributable to that original investment, and may result in an immediate reduction of the net asset value per share of the respective share classes after the distribution date.
Certain sub-funds with significant exposure to Renminbi (“RMB”) bonds/equity/assets or emerging markets, may involve debt instrument, credit/counterparty, concentration, liquidity, volatility, currency, tax, economic, foreign exchange/multi-currency conversion, down-grading, regulatory and political risks and these risks could be substantially higher than the risks normally associated with the world's more established markets.
A bond sub-fund may hold a significant portion of assets in deposits if there are not sufficient RMB instruments for it to invest in. This may adversely affect its return and performance.
Certain sub-funds using invest directly in debt instruments/shares via QFII regime, the Bond Connect and/or the Foreign Access Regime are subject to various requirements and restrictions under the laws of Mainland China related to investment in QFII and/or China Interbank Bond Market and custodial risks.
RMB is not freely convertible and is subject to exchange controls and restrictions.
Certain sub-funds may have significant concentrated exposures to particular industry sectors and geography's, which subjects investors to concentration and equity market risk.
Certain sub-funds may invest in equities of small- and mid-capitalization companies, which can expose investors to liquidity and volatility risks, and is subject to greater risk than is customarily associated with investments in larger capitalization companies.
Investment involves risk. The sub-funds may expose to a high risk of capital loss. Investors should not invest solely based on this material and should read the offering document for details including the risk factors, charges and features of the sub-funds.

Manulife Hong Kong Series

Manulife Hong Kong Series (“the Series”) is an open-ended unit trust comprising a number of funds primarily investing in equities, debt securities, exchange-traded funds and/or collective investment schemes, each of which has a different investment objective and risk level.
The funds do not guarantee distribution of dividends, the frequency of distribution, and the amount/rate of dividends. Dividends may be paid out of capital and/or out of gross income of certain funds in respect of Inc classes, while charging/paying all or part of certain funds’ fees and expenses to/out of capital of certain funds. This represents a return or a withdrawal of part of an investor's original investment amount or capital gain attributable to that amount. Distributions will result in an immediate decrease in the net asset value of the relevant units. Class AA (RMB) Inc Hedged Unit of certain funds is subject to higher distribution risks than other non-hedged unit classes.
Certain funds may involve equity market, emerging markets, Dim Sum bond market, concentration, volatility, liquidity, credit, credit ratings, below investment grade and unrated securities, credit rating downgrading, interest rates, valuation, sovereign debt, unlisted debt securities, political and regulatory, currency, foreign exchange, derivative and structured product, hedging, and distribution risks. Certain investors may also be subject to the risk relating to RMB hedged share class..
Certain funds are subject to the risks of investing in other funds and the risks relating to asset allocation strategy and/or downside risk management process.
Certain fund is subject to the risks relating to investment in exchange traded funds, Strategic and Tactical Asset Rebalancing Strategy (“STARS”), small- and mid-capped companies, convertible bonds and the risks associated with securitised debt instruments and investments in loss-absorption features. Certain fund is a feeder fund that invests all or substantially all of its assets in another collective investment scheme (the “master fund”) and is therefore subject to the risks of investing in the master fund.
Certain fund will not have direct investments other than cash, cash equivalents and financial derivative instruments (such as futures, options and forwards).
Investment involves risk. The funds may expose its investors to capital loss. Investors should not make investment decisions based on this material alone but should read the offering document for details, including the risk factors, charges and features of the Fund and its unit classes.