EQUITIES. Making the most of the market s long-term potential

Transcription

1 EQUITIES Making the most of the market s long-term potential

2 Three things to know about the stock market 1 It s one of the best ways to build wealth More than any other investment, stocks represent the dynamic nature and potential of a country s economy. Stocks have helped millions of investors build wealth, outpacing bonds and infl ation over the long term despite wars, recessions, and a host of other setbacks along the way. Stocks have outpaced bonds and inflation over time, despite a litany of volatility-inducing events n Stocks (S&P 500 Index) n Bonds (Barclays U.S. Aggregate Bond Index) n Infl ation (Consumer Price Index) $10,000,000 1/80 7/80 7/81 11/ Black Monday stock market crash 7/90 3/ Persian Gulf War 1998 Long-Term Capital Management collapse, President Clinton impeached 1997 Asian currency crisis 3/01 11/ Tech bubble bursts Bull lasted longer and had more impact Since 1956, there have been 11 bull and 11 bear. The bear averaged a decline of 27% and lasted only 14 months in duration, while the bull averaged a gain of 155% and lasted 51 months. Source: S&P Dow Jones Indices, Enron, WorldCom bankruptcies 2008 Lehman Brothers bankruptcy 12/07 6/ U.S. debt downgraded $7,333,305 2 It s global Opportunities to invest in stocks from outside the United States have grown dramatically in recent decades as mature and open up to foreign investment. U.S. businesses have also become more global over time, serving new consumer and sourcing a greater portion of their revenues from overseas. 1,000, Iran hostage crisis begins 1985 Savings and loan crisis begins 1982 Unemployment hits 10% 1994 Mexican peso crisis 2001 September 11 terrorist attacks 2003 Iraq invasion 2009 European sovereign debt crisis begins $1,925,396 $441,665 About half of the world s stock market opportunity lies outside the United States Global stock market capitalization Non-U.S. 47% Source: S&P Dow Jones Indices, Morningstar, Inc., U.S. 53% 100, are home to: 7 of the 10 largest materials companies 6 of the 10 largest energy companies 6 of the 10 largest banks 3 Corrections are normal On any given day, the market can seem like a popularity contest, where investors emotions decide which stocks get punished and which get rewarded. Occasionally, the market will also decline when investors believe it has grown too quickly. The challenge for investors is to ride out these temporary storms and realize that while the market doesn t go up in a straight line, it has gone up over time. The market will often experience setbacks before moving higher S&P 500 Index ( ) 1 Market capitalization is the total market, in dollar terms, of the issued shares of a publicly traded company or companies. Global market capitalization shown here refl ects country weights in the MSCI All Country World Index, which tracks the performance of publicly traded large- and mid-cap stocks of companies in 22 developed and 23 emerging. It is not possible to invest directly in an index Source for mountain chart (above): John Hancock Investments, The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The Barclays U.S. Aggregate Bond Index tracks the performance of U.S. investment-grade bonds in government, asset-backed, and corporate debt. The Consumer Price Index is an index of the variation in prices paid by typical consumers for retail goods and other items. It is not possible to invest directly in an index. Past Source: Standard & Poor s, John Hancock Investments, as of 12/31/15. It is not possible to invest directly performance does not guarantee future results. in an index. Past performance does not guarantee future results % n Calendar year return n Intrayear decline

3 WORST PERFORMER BEST PERFORMER Combining multiple equity strategies can make for a smoother ride Over time, diversifying across several different types of stocks can help manage risk and potentially boost returns because different segments of the stock market are typically tied to varying conditions in the underlying economy. While diversifi cation can t prevent a loss, it can temper volatility and help investors avoid the emotional ups and downs of investing that cause many to abandon well-made fi nancial plans. There s no telling which equity strategy will be the best performing from year to year Annual returns of common equity categories % 26.86% 23.48% 22.25% 20.22% 19.75% 13.35% 39.82% 11.81% 11.63% 11.43% 8.28% 7.05% 0.17% 28.92% 36.85% 38.44% 38.44% 38.54% 40.17% 43.06% 79.02% 46.29% 37.60% 37.21% 34.47% 34.21% 32.46% 29.09% 26.38% 24.75% 24.50% 20.53% 19.20% 16.71% 2.64% 0.39% 1.38% 1.65% 2.91% 4.85% 5.50% 18.63% 18.51% 18.05% 17.90% 17.51% 17.10% 15.81% 43.30% 35.74% 34.52% 33.48% 33.46% 32.53% 28.82% 14.75% 13.45% 13.05% 11.90% 7.07% 5.60% 4.22% 5.67% 0.20% 0.39% 1.38% 3.42% 3.83% 4.78% Reducing risk doesn t have to mean sacrificing returns Even a simple diversifi ed strategy of owning all equity categories in equal amounts produced one of the highest risk-adjusted returns, as measured by Sharpe ratio. Average return 8.53% 8.16% 7.95% 7.61% 6.68% 6.16% 5.57% Volatility (standard deviation) 11.73% 23.29% 10.66% 1.42% 44.32% 20.58% 15.51% 15.26% 1.82% 7.47% 3.95% 15.90% % 9.78% 53.18% 19.69% 8.21% 18.17% 14.59% 2.27% 4.48% 14.60% 3.50% 23.60% 20.30% 19.79% 18.49% 18.02% 17.85% 17.49% 15.33% Risk-adjusted return (Sharpe ratio) Consider this: Holding stocks for longer periods of time can greatly diminish the effects of short-term volatility. Since 1950, single-year returns of the S&P 500 Index have been as high as 61% and as low as 43%. However, over 20-year rolling periods, annualized returns are much less extreme, with a high of 18% and a low of 6%. Range of returns Annualized returns of the S&P 500 Index over rolling periods, % Highest return Lowest return 40 Source: Morningstar Direct, John Hancock Investments, are represented by the MSCI Markets Index, which tracks the performance of publicly traded large- and mid-cap emerging-market stocks. Large-, mid-, and small-cap and stocks and are represented, respectively, by the Russell year 5 year 10 year 20 year Growth Index, the Russell 1000 Value Index, the Russell Midcap Growth Index, the Russell Midcap Value Index, the Russell 2000 Growth Index, and the Russell 2000 Value Index. These indexes track the performance of publicly traded large-, mid-, or small-cap companies in the United States; indexes track those companies with higher price-to-book ratios and higher forecasted s; indexes track those companies with lower price-to-book ratios and lower forecasted s. is represented by the MSCI Europe, Australasia, and Far East (EAFE) Index, which tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. Total returns are calculated gross of foreign withholding tax on dividends. Diversifi ed are represented by an equal-weighted blend of all eight categories shown in the above chart. It is not possible to invest directly in an index. Standard deviation measures performance fl uctuation and may not be Source: Morningstar, as of 12/31/15. indicative of future risk, and is not a predictor of returns. Sharpe ratio is a measure of excess return per unit of risk, as defi ned by standard deviation. A higher Sharpe ratio suggests better risk-adjusted performance. Past performance does not guarantee future results. 4 5

4 The benefits of a diversified portfolio Diversifying the equity strategies in your portfolio can open up new sources of investment opportunity around the world, while also potentially improving your portfolio s overall risk/return profile. A diversified equity strategy has helped increase return potential 15-year performance results n U.S. stocks n Value stocks n Growth stocks n Developed foreign market stocks n -market stocks Traditional stock portfolio stock portfolio Annualized return Sharpe ratio Standard deviation Ending of $100,000 invested 15 years ago (rebalanced quarterly) 100% 15% 15% 10% 20% $239,150 $257,280 40% Equity investing with John Hancock Investments We offer a range of equity funds managed by specialized portfolio teams with proven track records in those strategies. Average annual total returns as of 3/31/16 2 (%) 1 year 3 year 5 year 10 year Life of fund John Hancock Disciplined Value Fund (JVLAX) Managed by Boston Partners 1/16/97 Class A (without sales charge) Class A (with 5% maximum sales charge) Net expense ratio (what you pay): 1.08% Gross expense ratio: 1.08% John Hancock Disciplined Value Fund (JDIBX) Managed by Boston Partners 12/30/11 Class A (without sales charge) Class A (with 5% maximum sales charge) Net expense ratio (what you pay): 1.38% 3 Gross expense ratio: 1.80% John Hancock Markets Fund (JEVAX) Managed by Dimensional Fund Advisors 5/1/07 Class A (without sales charge) Class A (with 5% maximum sales charge) Net expense ratio (what you pay): 1.45% Gross expense ratio: 1.45% John Hancock Global Shareholder Yield Fund (JGYAX) Managed by Epoch Investment Partners 3/1/07 Class A (without sales charge) Class A (with 5% maximum sales charge) Net expense ratio (what you pay): 1.28% Gross expense ratio: 1.28% John Hancock Fundamental Large Cap Core Fund (TAGRX) Managed by John Hancock Asset Management 9/30/84 Class A (without sales charge) Class A (with 5% maximum sales charge) Net expense ratio (what you pay): 1.05% Gross expense ratio: 1.05% John Hancock U.S. Global Leaders Growth Fund (USGLX) Managed by Sustainable Growth Advisers 9/29/95 Class A (without sales charge) Class A (with 5% maximum sales charge) Net expense ratio (what you pay): 1.18% Gross expense ratio: 1.18% Why this fund? The fund s veteran management team takes an all-weather approach, seeking to limit downside risk in falling while keeping pace in rising. The fund seeks to outperform non-u.s. equity over time by limiting downside risk in falling while keeping pace in rising. The fund looks for multiple sources of return while seeking to minimize turnover, trading costs, cash drag, and company-specific risks. The fund invests in worldwide and employs strong risk controls to generate income across all market environments with a lower level of volatility. The fund is designed to be opportunistic in its positioning within both and stocks, targeting quality companies that may be priced below their long-term potential. The fund seeks a focused portfolio of high-quality U.S. companies characterized by pricing power, recurring revenues, and global reach. Diversification does not guarantee a profit or eliminate the risk of a loss. Ask your financial advisor how equity funds from John Hancock Investments Source: Morningstar Direct, as of 3/31/16. This is for illustrative purposes only. U.S. stocks are represented by the S&P 500 Index, which tracks the performance of 500 of the largest publicly traded companies in the United States. Value stocks are represented by the Russell 3000 Value Index, an unmanaged index of those companies in the Russell 3000 Index Ask your advisor can help you better position your portfolio for building wealth. with lower price-to-book ratios and lower forecasted s. Growth stocks are represented by the Russell 3000 Growth Index, an unmanaged index of those companies in the Russell 3000 Index with higher price-to-book ratios and higher forecasted s. Developed foreign market stocks are represented by the MSCI World ex-usa Index, which tracks the performance of publicly traded large- and mid-cap stocks of developed-market companies outside the United States. Total returns are calculated gross of foreign withholding tax on dividends. -market stocks are represented by the MSCI Markets Index, which tracks the performance of publicly traded large- and mid-cap emerging-market 2 On 12/19/08, John Hancock Disciplined Value Fund acquired the assets of the Robeco Boston Partners Large Cap Value Fund (predecessor fund). Returns of the predecessor fund s Investor Class shares, first offered on 1/16/97, have been recalculated to apply the gross fees and expenses of Class A shares, first offered on 12/22/08. John Hancock Disciplined Value stocks. It is not possible to invest directly in an index. Past performance does not guarantee future results. Fund is the successor to Robeco Investment Management Equity Fund (predecessor fund) and was first offered on 9/29/14. Returns prior to this date are those Sharpe ratio is a measure of excess return per unit of risk, as defined by standard deviation. A higher Sharpe ratio suggests better risk-adjusted performance. Standard deviation of the predecessor fund s institutional class shares, launched on 12/30/11, and may be higher than if adjusted to reflect the expenses of any other share classes. 5/1/07 is the inception measures performance fluctuation, may not be indicative of future risk, and is not a predictor of returns. date for John Hancock Markets Fund s oldest class of shares, Class NAV shares. Class A shares were first offered on 3/31/11. The returns prior to this date are those of Class Value stocks may decline in price. Large company stocks could fall out of favor. Foreign investing, especially in emerging, has additional NAV shares that have been recalculated to apply the gross fees and expenses of Class A shares. Prior to 3/1/16, John Hancock Fundamental Large Cap Core Fund was named John Hancock Large Cap Equity Fund. The fund was incepted on 10/4/49. Performance prior to 9/30/84 is not available for Class A shares. On 5/17/02, John Hancock U.S. Global Leaders risks, such as currency and market volatility and political and social instability, and illiquid securities may be difficult to sell at a price approximating Growth Fund acquired all of the assets of the Sustainable Growth Advisers, LP U.S. Global Leaders Growth Fund, the fund s predecessor, pursuant to a reorganization. Performance prior their. Hedging and other strategic transactions may increase volatility and result in losses if not successful. Growth stocks may be more to 5/17/02 reflects the performance of the fund s predecessor. susceptible to earnings disappointments. A portfolio concentrated in one sector or that holds a limited number of securities may fluctuate more 3 Represents the effect of a fee waiver and/or expense reimbursement through 2/28/17. than a diversified portfolio. Illiquid securities may be difficult to sell at a price approximating their. Fund distributions generally depend on The past performance shown here reflects reinvested distributions and the beneficial effect of any expense reductions, and does income from underlying investments and may vary or cease altogether in the future. The stock prices of midsize and small companies can change not guarantee future results. Returns for periods shorter than one year are cumulative, and results for other share classes will more frequently and dramatically than those of large companies. Currency transactions are affected by fluctuations in exchange rates. Please see vary. Shares will fluctuate in and, when redeemed, may be worth more or less than their original cost. Current performance the funds prospectuses for additional risks. may be lower or higher than the performance cited. For the most recent month-end performance, visit jhinvestments.com. 6 7

5 John Hancock Investments A trusted brand John Hancock Investments is a premier asset manager representing one of America s most trusted brands, with a heritage of financial stewardship dating back to Helping our shareholders pursue their financial goals is at the core of everything we do. It s why we support the role of professional financial advice and operate with the highest standards of conduct and integrity. A better way to invest We build funds based on investor needs, then search the world to find proven portfolio teams with specialized expertise in those strategies. As a manager of managers, we apply vigorous oversight to ensure that they continue to meet our uncompromising standards and serve the best interests of our shareholders. Results for investors Our unique approach to asset management enables us to provide a diverse set of investments backed by some of the world s best managers, along with strong risk-adjusted returns across asset classes. A fund s investment objectives, risks, charges, and expenses should be considered carefully before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, contact your financial professional, call John Hancock Investments at , or visit our website at jhinvestments.com. Please read the prospectus carefully before investing or sending money. Connect with John Hancock jhinvestmentsblog.com John Hancock Funds, LLC Member FINRA, SIPC 601 Congress Street Boston, MA jhinvestments.com NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY. MF GROWTHBR 4/16