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JHPI ETF Beats Benchmark on Security Selection in Q1
John Hancock Preferred Income ETF outperformed its benchmark in Q1 2026. The manager credited security selection. The fund managed a shift in rate expectations that pressured preferred stocks.
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The John Hancock Preferred Income ETF (JHPI) outperformed its benchmark in the first quarter, according to the fund's quarterly commentary. The manager attributed the outperformance to security selection, not sector allocation.
The first quarter saw a shift in interest rate expectations. Early in the period, markets priced in multiple Federal Reserve rate cuts for 2026. By the end of March, those expectations had diminished. Inflation data remained sticky. Fed officials signaled patience. Preferred stocks, which are sensitive to changes in long-term rates, faced headwinds from the backup in yields.
JHPI's portfolio construction helped it manage the environment. The manager favored issuers with shorter reset periods and higher current coupons, according to the commentary. Those names held up better than the broader preferred market during the repricing of rate expectations. The fund also held a smaller position in the most rate-sensitive tranches, which added to relative performance. The manager said the outperformance came from individual security choices rather than broad sector bets.