ETF Pulse Check John Hancock Disciplined Value International Select ETF JDVI

The John Hancock Disciplined Value International Select ETF (JDVI) is an actively managed fund that targets undervalued large- and mid-cap equities issued outside the United States. The ETF's strategic focus is on achieving long-term capital growth by investing in equity securities globally, with a particular emphasis on developed markets, while also accommodating potential investments in emerging and frontier markets. The fund's value-oriented investment approach relies on fundamental, bottom-up stock selection based on various financial metrics and qualitative factors. JDVI's relevance in the current market lies in its diversified exposure to international equities, offering a potential hedge against U.S.-centric market risks. However, the fund's performance is contingent on global economic conditions and sector-specific dynamics, particularly within its largest sector exposure in Health Care, Financials, and Industrials.

Basic Information
The John Hancock Disciplined Value International Select ETF, with the ticker JDVI, is issued by Manulife and is set to launch on December 19, 2023. The ETF carries an expense ratio of 0.69%, positioning it competitively within its category. JDVI's top holdings include notable names such as SONY GROUP, Novartis, and Mitsubishi Electric, with the top 15 holdings collectively accounting for 42.84% of its total weight, reflecting a diversified portfolio approach. The fund's largest sector exposures are Health Care at 10.41% and Financials at 8.62%, indicating a strategic allocation towards sectors with robust economic fundamentals. Despite a neutral capital flow with 7-day and 30-day net flow ratios at 0.00%, JDVI has demonstrated solid performance with average returns of 10.08% over six months, 9.37% over one year, and 7.34% over three years, coupled with moderate volatility levels.

News Summary
Recent headlines in the health sector highlight ongoing developments in health policy, medical innovation, and global health challenges. The Mayo Clinic has made significant strides in cancer treatment with heavy particle therapy, while discussions on Medicaid and healthcare reforms continue to shape the U.S. healthcare landscape. Although these sector-specific news items do not directly impact JDVI, they underscore the dynamic nature of the healthcare sector, which constitutes a significant portion of the ETF's investments. Macro-level news, such as Hungary's central bank appointments, is unlikely to affect JDVI directly due to the ETF's diversified international focus. Nonetheless, broader geopolitical and economic shifts in Europe could subtly influence market sentiment and indirectly impact JDVI's performance.

Analyst Rating: Buy
John Hancock Disciplined Value International Select ETF (JDVI) is rated as a 'Buy', reflecting its balanced investment profile characterized by competitive cost efficiency, stable capital flows, and commendable return performance. The ETF's expense ratio of 0.69% is competitive, and its neutral net flow ratios suggest consistent investor interest. JDVI's robust return metrics, marked by a 10.08% return over six months and 9.37% over one year, underscore its potential to deliver favorable returns across different investment horizons. Despite a moderate premium rate standard deviation, JDVI's diversified sector exposure and minimal concentration risk bolster its viability as an investment option for those seeking international market exposure.

Backtest Scenario
A backtest of the John Hancock Disciplined Value International Select ETF (JDVI) against the healthcare sector's performance during the COVID-19 pandemic from 2020 to 2022 revealed that JDVI underperformed compared to the healthcare sector. This underperformance is attributed to JDVI's focus on value stocks and international investments, which did not align with the high growth and domestic demand characteristics of U.S. healthcare companies during the pandemic. The healthcare sector benefited from increased demand for medical services and products, particularly within the U.S., driven by fiscal stimulus and supportive monetary policies, whereas JDVI's international and value-focused strategy limited its exposure to these high-growth opportunities.

Risk Outlook
JDVI's portfolio diversification across major companies like SONY GROUP and Novartis and its sector exposure, particularly in Health Care and Financials, presents both opportunities and risks. The potential for regulatory changes and evolving global health trends could impact performance, especially within the healthcare sector. Regional economic fluctuations, particularly in Europe, could affect companies like Siemens and Heineken, which are part of JDVI's holdings. While liquidity risk remains subdued with stable investor interest, significant shifts in global economic indicators could alter this stability. Analysts should monitor regulatory changes, geopolitical developments, and broader economic conditions as potential risk factors affecting JDVI.

Conclusion
The John Hancock Disciplined Value International Select ETF (JDVI) offers a balanced investment option suitable for investors seeking exposure to international markets with a value-oriented approach. Its diversified portfolio and competitive expense ratio cater to balanced investors, although potential risks related to sector-specific and regional economic shifts warrant close monitoring. Going forward, investors should consider JDVI's performance in the context of evolving global economic conditions and sector-specific developments to assess its alignment with their investment objectives.