John Hancock Classic Value Fund's Q2 2025 Performance and Strategic Positioning: Navigating Inflation and Rate Uncertainty Through Value Investing

In Q2 2025, the John Hancock Classic Value Fund (JHCVF) demonstrated a disciplined approach to value investing amid a volatile macroeconomic landscape. While direct performance metrics for the fund remain opaque, insights from its closely related counterpart, the John Hancock Disciplined Value Fund (JVLAX), offer a compelling lens to analyze its strategic positioning. As inflationary pressures persist and interest rate uncertainty lingers, the fund's focus on undervalued equities with strong fundamentals positions it as a resilient option for long-term investors seeking capital preservation and growth.

A Value-Driven Strategy in a Shifting Environment

The fund's core philosophy aligns with traditional value investing principles: identifying companies with robust financials but depressed valuations. Metrics such as low price-to-book ratios, low price-to-earnings ratios, and high return on equity guide its selection process. This approach is particularly relevant in Q2 2025, as markets grapple with the aftermath of U.S. tariff announcements and fears of a potential recession. While growth stocks faltered during the quarter, value-oriented strategies like JHCVF's capitalized on mispricings in sectors such as industrials and energy, where earnings growth outpaced expectations.

The fund's portfolio composition reflects a balanced diversification strategy. As of Q2 2025, it allocated 47.8% to U.S. equities, 28.8% to international equities, and 18.8% to cash. This structure not only hedges against sector-specific downturns but also allows for opportunistic investments in global markets. For instance, the fund's exposure to the John Hancock 500 Index Trust (29.1%) and the International L&MC Index Trust (21.3%) enabled it to weather the tech sector correction while benefiting from the European market rebound.

Strategic Flexibility and Risk Mitigation

A defining feature of JHCVF's strategy is its adaptability. The fund's sub-adviser, Robeco Investment Management, actively pivots between sectors and geographies to exploit value opportunities. In Q2 2025, this flexibility proved advantageous as the fund overweighted industrials and energy sectors, which outperformed broader market averages. Additionally, its mandate to invest up to 20% in foreign currency-denominated securities allowed it to capitalize on emerging market rebounds, mitigating U.S.-centric risks.

Risk management is another cornerstone of the fund's approach. A 18.8% cash allocation in Q2 2025 provided liquidity to capitalize on market dips, while investments in the John Hancock Stable Value Guaranteed Income Fund (JHSVGI) offered a guaranteed 3.00% interest rate as of July 1, 2025. This stable-value component acts as a buffer during periods of heightened volatility, aligning with the fund's long-term capital growth objectives.

Trade-Offs and Considerations for Investors

While the fund's active management and sectoral flexibility enhance its resilience, they also introduce trade-offs. A high portfolio turnover rate—often exceeding 100%—increases transaction costs and short-term capital gains, which may elevate tax liabilities for investors. Additionally, sector concentration, though intentional, carries the risk of amplified losses if a favored industry underperforms. Investors must weigh these factors against the fund's potential for long-term outperformance.

Evaluating the Fund as a Core Holding

For long-term, disciplined investors, JHCVF's strategic positioning in Q2 2025 underscores its potential as a core holding. Its focus on undervalued equities, geographic diversification, and risk-aware approach align with the principles of value investing, which historically thrive in inflationary environments. By leveraging its active management capabilities and maintaining a cash buffer, the fund is well-equipped to navigate macroeconomic uncertainties while pursuing capital appreciation.

However, investors should remain cognizant of the fund's active trading approach and its implications for tax efficiency. Those with a higher risk tolerance and a long-term horizon may find JHCVF's strategy compelling, particularly in a market where overvalued assets are vulnerable to correction.

Conclusion

The John Hancock Classic Value Fund's Q2 2025 performance highlights the enduring relevance of value investing in a shifting macroeconomic landscape. By combining rigorous fundamental analysis with strategic flexibility, the fund navigates inflationary pressures and rate uncertainty while maintaining a focus on long-term growth. For investors seeking a disciplined, value-oriented approach to capital preservation and appreciation, JHCVF offers a compelling blueprint—one that balances risk, diversification, and opportunistic positioning in an unpredictable market.