The Strategic Case for the John Hancock Freedom 529 2041-2044 Portfolio in a Rising Rate Environment

The John Hancock Freedom 529 2041-2044 Portfolio has emerged as a focal point for investors seeking long-term growth in a landscape marked by persistent inflation and rising interest rates. With a heavy allocation to equities-76.20% in U.S. stocks and 23.80% in foreign stocks-the portfolio's structure diverges sharply from category averages, which typically include bonds, real estate, or cash holdings according to investment data. This equity-centric approach, while inherently riskier, positions the fund to capitalize on the resilience of global markets during periods of monetary tightening.

Asset Allocation and Market Resilience

The portfolio's lack of fixed-income exposure insulates it from the bond market's sensitivity to rising rates, a critical advantage in 2025. As noted by BlackRock in its 2025 Fall Investment Directions report, traditional 60/40 stock/bond allocations have lost efficacy due to shifting asset correlations driven by inflation and policy uncertainty. By contrast, the John Hancock Freedom 529 2041-2044 Portfolio's full equity allocation aligns with the performance of other equity-heavy 529 portfolios, such as the Vanguard Total Stock Market Index Portfolio, which delivered a 16.99% return in 2025 and a 3-year average of 22.09% according to performance data. These figures underscore equities' ability to outperform in rising rate environments, particularly when supported by structural tailwinds like U.S. tariff adjustments.

The inclusion of foreign stocks further enhances diversification. While U.S. equities dominate, the 23.80% allocation to international markets mitigates regional risks and taps into global growth opportunities. This strategy mirrors the success of the DFA International Core Equity Portfolio, which achieved a 35.93% return in 2025. In a world where central banks are recalibrating policies, such geographic breadth can buffer against localized volatility.

Historical Context and Strategic Positioning

Historical data reinforces the viability of equity-heavy 529 portfolios during rising rate cycles. Between 2015 and 2025, portfolios like the Vanguard Aggressive Growth Portfolio posted a 23.03% annual return in 2025, with a 3-year average of 20.16% according to performance metrics. These results suggest that equities, particularly those with global exposure, can thrive even as interest rates climb. For the John Hancock Freedom 529 2041-2044 Portfolio, this historical precedent supports its current structure, which prioritizes long-term capital appreciation over short-term stability.

However, the fund's limited performance data-0.52% year-to-date and 1.13% since inception according to fund reports-raises questions about its immediate returns. This underperformance, relative to other John Hancock portfolios like the 2025-2028 Portfolio (which saw double-digit gains in Q2 2025), highlights the trade-off between risk and reward. Yet, given its 2041-2044 target date, the portfolio is designed for long-horizon investors who can weather short-term volatility.

Resilience Strategies in a High-Rate Environment

To bolster resilience, equity-heavy 529 portfolios can adopt strategies beyond traditional diversification. BlackRock recommends incorporating liquid alternatives, such as equity market-neutral funds, to generate uncorrelated returns. While the John Hancock Freedom 529 2041-2044 Portfolio does not currently include such assets, its international equity exposure aligns with another key recommendation: reducing U.S. dollar concentration. As global markets restructure, non-dollar assets offer a hedge against currency fluctuations and geopolitical risks.

Additionally, the portfolio's absence of real assets like gold or real estate-a common feature in diversified portfolios-presents an opportunity. As noted by SSGA, real assets provide inflation protection and low correlations to stocks and bonds. For investors seeking to enhance the fund's resilience, a strategic reallocation toward these assets could mitigate equity-specific risks without compromising growth potential.

Conclusion

The John Hancock Freedom 529 2041-2044 Portfolio's equity-heavy structure and international diversification position it as a strategic option in a rising rate environment. While its immediate returns lag behind other portfolios in the John Hancock suite, historical performance of similar equity-focused funds demonstrates their capacity to outperform in such conditions. For long-term investors, the portfolio's alignment with global market trends and its avoidance of bond-related risks make it a compelling choice. As central banks continue to navigate inflationary pressures, the fund's resilience will depend on its ability to adapt to evolving diversification strategies-particularly those incorporating alternatives and real assets.