John Hancock seems to be getting the low-fee message. The company announced in early July that it would reduce expenses –its fourth such move in less than three years—on a broad range of funds that together represent more than $36 billion in assets under management. Reductions of up to 26 basis points or up to 38 percent per fund vary by fund and result from a combination of direct cuts, contractual expense caps, new breakpoints, and growing economies of scale.
“Maximizing the value we provide our mutual fund shareholders goes well beyond the strong risk-adjusted performance of our funds,” Andrew Arnott, President and CEO of John Hancock Investments, said in a statement. “We remain intensely focused on fees and on ensuring that our funds are cost effective for investors.”
Much of the opportunity to repeatedly lower expenses stems from surging assets under management at John Hancock Investments and the greater economies of scale it provides, the company claims. The firm has experienced 14 consecutive calendar quarters of positive net flows, and mutual fund assets have increased nearly 16 percent year-over-year through the end of May.
“This dramatic growth has been driven in large part by the firm’s exceptionally strong performance, with 35 funds rated four or five stars by Morningstar at the highest-rated share class.”
“Investors and financial advisors increasingly have turned to our unique manager-of-managers approach because they value the more than 25 years’ experience in manager research and oversight we put into every one of our funds,” Arnott added. “We’re pleased that our growth in assets under management enables us to share those greater economies of scale with our investors.”
Funds with contractual expense reductions to net expense ratios ranging from one to 24 basis points include:
- John Hancock Global Income Fund (Class A and Class I only)
- John Hancock International Core Fund (Class A and Class I only)
- John Hancock Small Cap Value Fund (Class A and Class I only)
- John Hancock Small Company Fund (Class A and Class I only)
- John Hancock Value Equity Fund
In addition to these expense reductions, other John Hancock mutual funds continue to see their expenses decline due to asset growth and lower custodian fees. Expenses are estimated to be between three and 24 basis points lower going forward for Class A shares for the following funds:
- John Hancock Core High Yield Fund
- John Hancock Disciplined Value Fund
- John Hancock Disciplined Value Mid Cap Fund
- John Hancock Global Shareholder Yield Fund
- John Hancock International Growth Fund
- John Hancock International Value Equity
- John Hancock Strategic Growth Fund
John Hancock Investments also lowered expenses by 20 to 26 basis points across both the John Hancock Retirement Living II target-date suite and the John Hancock Retirement Choices target-date suite, which total 20 funds. Target-date funds have played an increasingly important role as default options in retirement plans. These cuts provide significant cost savings for shareholders while also positioning the funds for future growth.
These expense reductions follow additional reductions made in the John Hancock Freedom 529 plan and 23 other fee reductions in the mutual fund lineup over the last few years.
See Also:
- John Hancock Launches New Fiduciary Product
- John Hancock Expands ‘Personalized Retirement Advice’ Program to All 401k Plans
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
