Value Investing in a Shifting Market Landscape: Assessing the Resilience of the John Hancock Disciplined Value Fund Amid Q3 2025 Trends

The third quarter of 2025 has been a masterclass in market resilience, with value investing reasserting its relevance amid a shifting macroeconomic landscape. As the Federal Reserve's September rate cut signaled a pivot from inflation to labor market concerns, value stocks-particularly in mid and small-cap markets-surged, driven by a combination of lower borrowing costs and renewed optimism about economic fundamentals according to a report. Against this backdrop, the John Hancock Disciplined Value Fund (JDVWX) has emerged as a standout performer, outpacing its benchmark, the Russell 1000 Value Index, by a notable margin. This article dissects the fund's strategic positioning, sector allocations, and alignment with Q3 2025 trends to evaluate its ability to capitalize on the current environment.

A Macro-Driven Rally for Value Stocks

The Federal Reserve's 25-basis-point rate cut in September 2025 marked a pivotal shift in monetary policy, easing pressure on capital-intensive sectors and boosting the appeal of value stocks. According to JPMorgan, this move "reduced the cost of capital for economically sensitive industries, fueling a rebound in sectors like industrials, materials, and financials". The Russell 2000, a proxy for small-cap value stocks, surged 12.4% in Q3, underscoring the sector's responsiveness to rate cuts. For the John Hancock Disciplined Value Fund, which allocates at least 80% of its assets to value stocks with market caps above $1 billion, this environment has been a tailwind.

The fund's focus on value characteristics-such as low price-to-book (P/B) and price-to-earnings (P/E) ratios-has proven advantageous. As stated by the fund's prospectus, its strategy emphasizes "companies with strong operating fundamentals, including return on equity and cash flow generation". This disciplined approach aligns with the Q3 rally, where value stocks with robust balance sheets and earnings visibility outperformed growth peers.

Sector Allocations: Financials Lead the Charge

One of the fund's most striking features in Q3 2025 is its heavy exposure to the financial sector. As of October 31, 2025, financials accounted for nearly 30% of the portfolio, a strategic bet that paid off as the sector benefited from lower interest rates and improved credit conditions. The Fed's rate cut reduced borrowing costs for banks and insurers, while the softening labor market mitigated fears of a recession, boosting investor confidence in financials.

The fund's top five sectors represented 69.73% of the portfolio, with industrials, materials, and consumer discretionary also contributing to gains according to fund data. These sectors, all economically sensitive, thrived as the market shifted focus from inflation to growth. For instance, industrials rallied on optimism about infrastructure spending, while materials firms benefited from stable commodity prices and improved supply chains. The fund's ability to overweight these sectors-while maintaining a diversified portfolio-demonstrates its agility in navigating macroeconomic shifts.

Strategic Positioning: Balancing Discipline and Flexibility

The John Hancock Disciplined Value Fund's success in Q3 2025 is not solely attributable to sector allocations. Its strategic flexibility-such as the ability to invest up to 20% of assets in foreign currency-denominated securities-allowed it to hedge against currency risks and capitalize on international opportunities. While the fund's primary focus remains U.S. equities, its geographic diversification provided a buffer against trade policy uncertainties, particularly in emerging markets, which delivered a robust 10.6% return in Q3.

However, the fund's performance was not without challenges. According to its Q3 commentary, stock selection detracted from relative performance, highlighting the difficulty of identifying undervalued companies in a rapidly shifting market. This underscores the importance of maintaining a disciplined, long-term approach, even as short-term volatility creates noise.

The Road Ahead: Navigating Uncertainty with Fundamentals

As we enter the final quarter of 2025, the John Hancock Disciplined Value Fund's positioning appears well-aligned with ongoing market trends. The Fed's dovish stance, coupled with resilient consumer spending and a softening labor market, suggests that value stocks will remain in favor. For investors, the fund's emphasis on fundamentals-rather than chasing speculative growth-offers a compelling case for long-term capital appreciation.

Yet, risks persist. Geopolitical tensions and trade policy uncertainties could disrupt corporate earnings, particularly in export-driven sectors. The fund's focus on large-cap value stocks, while less volatile than small-cap counterparts, may limit its ability to capitalize on niche opportunities in mid-cap markets. Nevertheless, its disciplined approach to valuation metrics and sector rotation provides a strong foundation for navigating these challenges.

Conclusion

The John Hancock Disciplined Value Fund's Q3 2025 performance exemplifies the power of value investing in a shifting market landscape. By leveraging rate cuts, sector rotations, and a disciplined focus on fundamentals, the fund has outperformed its benchmark and positioned itself to capitalize on ongoing trends. For investors seeking resilience amid macroeconomic uncertainty, this fund offers a compelling case study in strategic value investing.