An interesting development with its U.S. subsidiary John Hancock begs the question whether Canada is soon to follow.
John Hancock is getting into the ETF business.
The Manulife subsidiary filed a prospectus Monday with the SEC in the U.S. that will see it create a total of six index ETFs hiring Dimensional Fund Advisors, known as DFA to advisors on both sides of the border, as the manager of the funds.
The two firms aren’t strangers to each other.
DFA currently manages $3.2 billion in John Hancock-branded mutual funds for its retirement business. With DFA one of the fastest growing fund companies in 2015 in terms of mutual fund sales — $11.6 billion through mid-July — the combination could be a powerful one given the two firms combined manage over $500 billion in mutual funds.
“To my knowledge, DFA (Dimensional) hasn't necessarily been against the ETF structure in and of itself, but rather didn't like the idea of not having control over who was able to buy and sell their products,” said Phil Huber, chief investment officer at Huber Financial Advisors, a Lincolnshire, Ill.-based advisory firm managing $849 million. “Working with John Hancock from a sub-advisory standpoint would provide access to DFA's management to retail investors that may not have otherwise been able to unless they worked with a DFA approved adviser.”
Should the company choose to do the same thing in Canada at some point in the future, is this good news or bad news for the dual-licensed Manulife advisor? That depends.
While it’s two early to tell the fact that the six ETFs are all index funds (one large cap, one mid cap, and four sector funds) presupposes that DFA could be moving slightly off its traditional position as a factor-based investor that combines elements of both active and passive investing.
“It will be confusing for advisers,” said Alex Potts, CEO of California-based Loring Ward Group, whose firm manages $12 billion in AUM and uses DFA’s products. “Normally, running a sector fund wouldn't be anything they'd recommend for an individual's portfolios.”
Should the John Hancock/DFA hookup be successful it’s not unreasonable to think they will roll out more ETFs in the future. If so, dual-licensed Manulife advisors could someday have another product offering for clients here in Canada.
The Manulife subsidiary filed a prospectus Monday with the SEC in the U.S. that will see it create a total of six index ETFs hiring Dimensional Fund Advisors, known as DFA to advisors on both sides of the border, as the manager of the funds.
The two firms aren’t strangers to each other.
DFA currently manages $3.2 billion in John Hancock-branded mutual funds for its retirement business. With DFA one of the fastest growing fund companies in 2015 in terms of mutual fund sales — $11.6 billion through mid-July — the combination could be a powerful one given the two firms combined manage over $500 billion in mutual funds.
“To my knowledge, DFA (Dimensional) hasn't necessarily been against the ETF structure in and of itself, but rather didn't like the idea of not having control over who was able to buy and sell their products,” said Phil Huber, chief investment officer at Huber Financial Advisors, a Lincolnshire, Ill.-based advisory firm managing $849 million. “Working with John Hancock from a sub-advisory standpoint would provide access to DFA's management to retail investors that may not have otherwise been able to unless they worked with a DFA approved adviser.”
Should the company choose to do the same thing in Canada at some point in the future, is this good news or bad news for the dual-licensed Manulife advisor? That depends.
While it’s two early to tell the fact that the six ETFs are all index funds (one large cap, one mid cap, and four sector funds) presupposes that DFA could be moving slightly off its traditional position as a factor-based investor that combines elements of both active and passive investing.
“It will be confusing for advisers,” said Alex Potts, CEO of California-based Loring Ward Group, whose firm manages $12 billion in AUM and uses DFA’s products. “Normally, running a sector fund wouldn't be anything they'd recommend for an individual's portfolios.”
Should the John Hancock/DFA hookup be successful it’s not unreasonable to think they will roll out more ETFs in the future. If so, dual-licensed Manulife advisors could someday have another product offering for clients here in Canada.
