Value Investing in a Post-Recessionary Market: John Hancock Disciplined Value Fund's Strategic Positioning in Q2 2025 to Capture Undervalued Opportunities

In the aftermath of a recession, markets often enter a phase of recalibration. While volatility persists, value investing—rooted in the identification of undervalued assets—can offer a compelling path to long-term growth. The John Hancock Disciplined Value Fund (JVLAX) exemplifies this approach, leveraging its disciplined strategy to navigate the complexities of a post-recessionary landscape. As of Q2 2025, the fund's strategic positioning highlights its ability to capitalize on mispriced opportunities while balancing risk through diversification and active management.

A Disciplined Framework for Value Investing

The fund's core philosophy is anchored in traditional value investing principles. It targets companies with strong fundamentals but depressed valuations, using metrics such as low price-to-book ratios, price-to-earnings ratios, and robust return on equity. These criteria are applied across a broad spectrum of market capitalizations, with a minimum 80% allocation to equities of $1 billion or more. By combining quantitative screening with in-depth fundamental research, the fund identifies stocks that the market may have temporarily overlooked.

In Q2 2025, the fund's portfolio reflected a 47.8% allocation to U.S. equities, 28.8% to international equities, and 18.8% to cash. Key holdings included the John Hancock 500 Index Trust (29.1%), the International L&MC Index Trust (21.3%), and the U.S. Large Cap Select Return Trust (19.4%). This structure allowed the fund to hedge against sector-specific downturns while maintaining exposure to global growth opportunities. For instance, during a Q2 2025 tech sector correction, the fund's large-cap U.S. holdings provided stability, while its international exposure benefited from a European market rebound.

Strategic Flexibility in a Shifting Market

The fund's ability to pivot between sectors and geographies is a hallmark of its strategy. While it avoids rigid sector allocations, it may overweight industries where value opportunities are most pronounced. For example, in Q2 2025, the fund's sub-adviser, Robeco Investment Management, identified undervalued opportunities in sectors such as industrials and energy, where earnings growth outpaced market expectations. This flexibility is critical in a post-recessionary environment, where certain industries recover faster than others.

The fund also embraced its mandate to invest up to 20% of assets in foreign currency-denominated securities. This international diversification proved advantageous in Q2 2025, as emerging markets rebounded from pandemic-related disruptions. By allocating to high-growth economies, the fund mitigated U.S.-centric risks and captured returns from undervalued global equities.

Risk Management and Liquidity Considerations

Value investing is not without risks. The fund's high portfolio turnover—often exceeding 100%—reflects its active trading approach, which can lead to increased transaction costs and short-term capital gains. However, this dynamism is intentional, enabling the fund to rotate out of overvalued positions and into newly undervalued ones.

To manage liquidity, the fund maintained a 18.8% cash allocation in Q2 2025, a buffer that allowed it to capitalize on market dips. Additionally, it invested in the John Hancock Stable Value Guaranteed Income Fund (JHSVGI), which offered a 3.00% guaranteed interest rate as of July 1, 2025. This stable-value component provided downside protection during periods of heightened volatility, aligning with the fund's conservative glide path toward its 2050 target date.

Investment Implications for a Post-Recessionary Market

For investors seeking long-term capital appreciation, the fund's strategy offers several advantages. First, its focus on value stocks—often overlooked during market euphoria—positions it to benefit from mean reversion as economies stabilize. Second, its geographic and sector diversification reduces exposure to idiosyncratic risks, a critical factor in a post-recessionary environment where sector rotations are common.

However, investors must also consider the fund's potential for volatility. Sector concentration, while strategic, can amplify losses if a favored industry underperforms. Similarly, its active trading approach may result in higher tax liabilities due to short-term capital gains. These trade-offs underscore the importance of aligning the fund's strategy with an investor's risk tolerance and time horizon.

Conclusion: A Value-Driven Path Forward

The John Hancock Disciplined Value Fund's Q2 2025 positioning demonstrates the resilience of a value-oriented approach in a post-recessionary market. By combining rigorous fundamental analysis with active portfolio management, the fund has navigated macroeconomic uncertainties while maintaining a focus on long-term capital growth. For investors willing to tolerate short-term volatility, the fund offers a disciplined framework to capitalize on undervalued opportunities—a strategy that remains as relevant today as it was during the market's nadir.

In a world where markets are increasingly driven by sentiment and speculation, the fund's adherence to value investing principles serves as a reminder that patience and discipline can yield outsized rewards. As the global economy continues its recovery, the fund's strategic positioning in Q2 2025 provides a blueprint for identifying and acting on the mispricings that define post-recessionary markets.