Fundamental equity
The Manulife fundamental equity team combines market expertise with an ESG-minded investment process to identify companies with strong capital efficiency and free cash flow. The team's disciplined data-driven approach to stock selection is designed to help portfolios generate returns in up markets and offer protection in down markets.
Let the numbers tell the story
Patrick Blais, CFA, FSA, senior portfolio manager of Manulife Fundamental Equity Fund, discusses his team's approach to investing.
Seeking value in energy
Patrick discusses the Canadian energy sector from a cash flow perspective, how the fund has been positioned since pre-2020 up until today.
Targeting growth with downside protection
The Manulife fundamental equity team focuses on delivering long-term outperformance for investors backed up by strong downside protection. Our Fundamental Equity Fund, Fundamental Balanced Class, and Canadian Equity Private Pool illustrate the effectiveness of their approach, outperforming both their peer group and benchmarks over 1, 3, 5, and 10 years.
Performance
1 year |
3 year |
5 year |
10 year | 15 year | 20 year | Since inception¹ |
|
|---|---|---|---|---|---|---|---|
Manulife Fundamental Equity Fund - Series F (MMF699) |
23.99% | 14.01% | 14.22% | 11.56% | 12.23% | 9.35% | 9.42% |
Canadian focused equity category |
16.56% | 8.70% | 10.14% | 7.99% | 10.17% | 7.55% | — |
Benchmark² |
13.96% | 9.11% | 9.96% | 7.67% | 9.65% | 7.88% | — |
Morningstar Rating™ |
— |
★★★★★ | ★★★★★ | ★★★★★ | — | — | — |
Quartile ranking |
1st | 1st | 1st | 1st | 1st | 1st | — |
Percentage of peers beaten |
88% | 97% | 89% | 90% | 85% | 84% | — |
Number of funds in category |
518 | 503 | 487 | 339 | 182 | — | — |
Performance difference between Manulife Fundamental Equity Fund, Series F, and its peer fund category on a rolling 5-year basis since the team took over management of the fund
Source: Morningstar Direct, as of March 31, 2024. The Manulife fundamental equity team took over management of the fund since November 2012 during our Standard Life acquisition.
Since the team took over management of the fund, on a rolling 5-year basis, Manulife Fundamental Equity Fund has outperformed its Morningstar peer fund category 100% of the time, with an average calendar year outperformance of 415 basis points.
Performance
1 year |
3 year |
5 year |
10 year | Since inception³ |
|
|---|---|---|---|---|---|
Manulife Fundamental Balanced Class - Series F (MMF8644) |
16.30% | 9.26% | 9.91% | 8.67% | 8.62% |
Canadian equity balanced category |
11.10% | 5.75% | 6.80% | 5.64% | — |
Benchmark⁴ |
9.77% | 5.40% | 6.71% | 5.83% | — |
Morningstar Rating™ |
— |
★★★★★ | ★★★★★ | ★★★★★ | — |
Quartile ranking |
1st | 1st | 1st | 1st | — |
Percentage of peers beaten |
95% | 94% | 93% | 97% | — |
Number of funds in category |
334 | 323 | 294 | 214 | — |
Performance difference between Manulife Fundamental Balanced Class, Series F, and its peer fund category on a rolling 5-year basis since inception
Source: Morningstar Direct, as of March 31, 2024.
Since inception on a rolling 5-year basis, Manulife Fundamental Balanced Class has outperformed its Morningstar peer fund category 100% of the time, with an average calendar year outperformance of 291 basis points.
Performance
1 year |
3 year |
5 year |
10 year | Since inception⁵ |
|
|---|---|---|---|---|---|
Manulife Canadian Equity Private Pool - Series F (MMF4017) |
18.45% | 11.61% | 13.10% | 10.56% | 10.98% |
Canadian equity category |
12.72% | 8.65% | 8.93% | 6.86% | — |
Benchmark⁶ |
13.96% | 9.11% | 9.96% | 7.67% | — |
Morningstar Rating™ |
— |
★★★★★ | ★★★★★ | ★★★★★ | — |
Quartile ranking |
1st | 1st | 1st | 1st | — |
Percentage of peers beaten |
96% | 92% | 96% | 97% | — |
Number of funds in category |
604 | 517 | 464 | 282 | — |
Performance difference between Manulife Canadian Equity Private Pool, Series F, and its peer fund category on a rolling 5-year basis since inception
Source: Morningstar Direct, as of March 31, 2024.
Since inception on a rolling 5-year basis, Manulife Canadian Equity Private Pool has outperformed its Morningstar peer fund category 100% of the time, with an average calendar year outperformance of 347 basis points.
Investment process
The Manulife fundamental equity team believes that long-term stock returns are linked to a company’s ability to use its assets to generate income. To find such companies, the team uses a proprietary method of calculating economic earnings and cash-based return on capital. The investment approach is best characterized as style neutral, fundamental in nature, and done on a company-by-company basis.
Learn more about the Manulife fundamental equity teamFundamentals the team looks for
Historically focusing on these facets has helped generate attractive risk-adjusted returns over the long term.
For Illustrative purposes only. Past performance does not guarantee future results. Sustainability represents the ability to maintain cash flows and free cash flow (FCF) at a certain level and does not refer to sustainable investing or ESG investing.
The team takes a three-pronged approach to uncovering opportunities
Source: Manulife Investment Management.
Pulling apart the financials to find the true sustainable cash flow
For Illustrative purposes only. FCF refers to free cash flow. EBITDA refers to earnings before interest, taxes, depreciation, and amortization.
Cash flow with a passion
The team goes above and beyond a traditional approach in its search for free cash flow, spending weeks and months analyzing more than 10 years' worth of financial statements. Team members pride themselves on not only relying on meetings with company management and instead make their decisions with a strong focus on the data. Only once a company has passed their stringent tests will it even be considered for inclusion in the portfolio.
The team believes this disciplined approach to seeking companies with strong capital efficiency and the right kind of cash flow can help portfolios generate returns in up markets and offer protection in down markets.
Cash flow is king
Patrick discusses the significance of cash flow.
Dynamic portfolio construction
By using a dynamic approach to asset allocation, the team has greater flexibility to follow the best opportunities wherever they may be. This allows the team to remain nimble and act swiftly in response to market changes. The team can actively manage its position in a stock based on its current value, taking profits when the stock price is high and buying when prices fall, thereby maximizing free cash flow yield.
Active management
Buying and selling activity based on FCF yield %
Source: Manulife Investment Management, Bloomberg, April 30, 2023. The above is meant to illustrate a component of the decision-making process that goes into buying or selling a stock within a portfolio and represents only a portion of the considerations measured and evaluated. Trading history and methodology for stocks purchased or sold may or will differ. This chart is solely for illustrative purpose and does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security or adopt any investment approach. FCF refers to free cash flow.
ESG built-in
We're focused on environmental, social, and governance (ESG) integration within the Manulife fundamental equity team, a process we’ve built up over a number of years. The team implements a robust ESG framework that allows it to measure ESG opportunities and risks and incorporate these into the foundations of its investment process. What’s more, the team extends ESG factor analysis to engagement, with managers meeting with investee companies to assess their resiliency to ESG risks and their ability to take advantage of ESG opportunities. This ongoing dialogue with companies over their ESG exposures is a powerful lever for enhancing their operating strength.
Union of experienced investment and ESG teams
Blending active management with sustainable insight
For Illustrative purposes only.
Active ownership—rights and responsibilities
We seek to enhance value for our clients and instill resilience across our investments.
For illustrative purposes only. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment.
Our funds
Mutual funds
- Manulife Canadian Dividend Growth Fund
- Manulife Canadian Equity Class
- Manulife Canadian Equity Private Pool
- Manulife Canadian Growth and Income Private Trust
- Manulife Climate Action Class
- Manulife Climate Action Fund
- Manulife Fundamental Balanced Class
- Manulife Fundamental Dividend Fund
- Manulife Fundamental Equity Fund
- Manulife Fundamental Income Class
- Manulife Fundamental Income Fund
- Manulife Tactical Income Fund
Segregated funds
- Ideal Canadian Dividend Growth Fund
- Ideal Tactical Income Fund
- Manulife Canadian Equity Class GIF Select
- Manulife Canadian Equity Private Segregated Pool
- Manulife Canadian Growth & Income Private Segregated Pool
- Manulife Climate Action GIF Select
- Manulife Climate Action Private Segregated Pool
- Manulife Fundamental Balanced Class GIF Select
- Manulife Fundamental Balanced Class Private Segregated Pool
- Manulife Fundamental Dividend GIF Select
- Manulife Fundamental Equity GIF Select
- Manulife Fundamental Equity Private Segregated Pool
- Manulife Fundamental Income GIF Select
Important disclosures
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts as well as the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in share/unit value and reinvestment of all dividends/distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.
Investing involves risks, including the potential loss of principal. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person.
All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients and prospects should seek professional advice for their particular situation. Neither Manulife Investment Management, nor any of its affiliates or representatives (collectively Manulife Investment Management) is providing tax, investment or legal advice.
The views expressed are those of Manulife Investment Management and are subject to change based on market and other conditions. All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, financial or legal advice. Clients should seek professional advice for their particular situation. Neither Manulife, Manulife Investment Management, nor any of its affiliates or representatives is providing tax, financial or legal advice. Past performance does not guarantee future results.
Manulife Investment Management shall not 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 here. This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security or adopt any investment approach, and is no indication of trading intent in any fund or account managed by Manulife Investment Management. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation does not guarantee a profit or protect against the risk of loss in any market. Unless otherwise specified, all data is sourced from Manulife Investment Management. Past performance does not guarantee future results.
Series F is generally designed for investors who have a fee-based or wrap account with their dealer. Series F performance is net of fees and expenses.
The comparison presented is intended to illustrate the mutual fund’s historical performance as compared with the historical performance of widely quoted market indices or a weighted blend of widely quoted market indices. There are various important differences that may exist between the mutual fund and the stated indices, that may affect the performance of each. The objectives and strategies of the mutual fund result in holdings that do not necessarily reflect the constituents of and their weights within the comparable indices or investment fund. Indices are unmanaged and their returns do not include any sales charges or fees. It is not possible to invest directly in market indices.
© 2024 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
The Morningstar Rating, commonly referred to as the Star Rating, relates how a fund has performed on a risk-adjusted basis against its Morningstar category peers and is subject to change every month. Calculations are based on the funds in each Morningstar category to better measure fund manager skill. Funds are ranked by their Morningstar Risk-Adjusted Return scores with the top 10% of funds in a category receiving 5 stars, the top 22.5% receiving 4 stars; a fund in the middle 35% receiving 3 stars; a fund in the next 22.5% receiving 2 stars and a fund in the bottom 10% receiving 1 star. The Overall Star Rating for a fund is a weighted combination of its 3, 5 and 10 year ratings. Overall ratings are adjusted where a fund has less than 5 or 10 years of history. Please refer to www.morningstar.ca for greater detail on the calculation of the Star Ratings.
The Morningstar Absolute Quartile Rankings are compiled by sorting the funds by returns relative to the mutual funds within the same peer group and range from 1 to 4 for all time periods covered and can change monthly. The top performing 25% of funds in each fund category are assigned a ranking of 1, the next 25% a 2, etc.
Manulife Funds are managed by Manulife Investment Management Limited. Manulife Investment Management is a trade name of Manulife Investment Management Limited.
Manulife, Manulife Investment Management, the Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.
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