The municipal bond market offers no shortage of opportunities. With more than 60,000 issuers and roughly 1.2 million CUSIPs, the sheer scale creates both opportunity and complexity. Adam Weigold, Senior Portfolio Manager and Head of Municipal Bonds at Manulife Investment Management, sees the vastness of the municipal landscape as a feature, not a bug.
The John Hancock Dynamic Municipal Bond ETF (ticker: JHMU) centers on exploiting market inefficiencies through active management—a strategy Weigold believes offers meaningful advantages over passive approaches in municipal bonds.
“I think JHMU fills a nice role of a tax-efficient, active muni fund,” he explains. “The ETF wrapper makes sense in munis, where people are looking for tax efficiency, and I think the name says it all—it’s a dynamic municipal bond fund that can kind of go anywhere and take advantage of the inefficiencies in the municipal bond market in an ETF wrapper.”
JHMU blends ETF transparency and tax efficiency with a research-driven approach that seeks both income and total return. Few actively managed municipal ETFs exist, giving JHMU a differentiated position in the market. “There’s not a lot of us out there, and I think what we do is unique in the muni space and all this benefits the shareholder in the end,” Weigold adds.
Beyond Buy and Hold: A Strategy Built on Constant Reassessment
When Weigold describes JHMU as “dynamic,” he’s pointing to a fundamental feature of the fund’s operational philosophy. The strategy doesn’t rely on setting allocations and waiting for outcomes to materialize. Instead, the portfolio management team continuously evaluates market conditions, sector positioning, and individual security opportunities.
“It’s not a buy-and-hold, set-and-forget strategy,” notes Weigold. “We’re going to be looking at the market on a real-time basis and adjusting the portfolio to provide total return to the shareholders.”
Income remains central but not the only objective. “Our goal is to give the client all the income, the tax-free income that they expect out of a municipal bond fund, but also add some total return on top of that,” he says.
Rather than making broad interest rate calls, the team focuses on credit analysis—identifying where value exists among individual issuers and bond structures. “Munis are a credit-based market, and that’s where you can really add value,” Weigold observes. “So, we are a bottom-up manager, and we will look at the curve and decide where the best places are.”
And forward-looking positioning is built into the process. “I think it comes down to looking at the market and seeing where the opportunities are and positioning the portfolio accordingly,” he adds. “Trying to see what’s going to outperform over the next 12 to 18 months and being in the right place at the right time.”
The fund operates within the intermediate duration range, though how it reaches that target can vary based on market conditions. JHMU can also allocate up to 20% of assets to below-investment-grade securities, giving Weigold and his team another lever to adjust credit exposure. “We’ll use that portion of the portfolio to kind of toggle up and down our exposure to credit,” he points out.
Sector Rotation and the Art of Timing Credit Exposure
Sector rotation plays a meaningful role in JHMU’s flexibility. About once a quarter, the team reassesses sector outlooks, spread levels, and evolving fundamentals to position ahead of sector movements rather than react after shifts have occurred.
Consider the fund’s recent hospital-to-airport pivot. JHMU held meaningful exposure to hospital bonds throughout 2024, a position that performed well as the sector delivered strong returns. Yet, as the year progressed and Weigold’s team assessed the outlook, warning signs emerged, and they pivoted accordingly. “We looked at what was going to happen going forward,” he says, “reduced our allocation, and moved into airports.”
Airport bonds offered what hospitals no longer did: attractive spreads relative to risk. “We felt like airport spreads were wide, and it’s been a good trade,” he notes.
Municipal bonds’ unique characteristics—different curve shapes compared to Treasuries or corporates, sector-specific dynamics, structural variations—require constant vigilance. “Our market’s always changing, and there are odd reasons why certain munis may perform or underperform or why the curve may be shaped a different way than the treasury curve or the corporate curve,” Weigold points out. “We’re trying to understand that and allocate accordingly.”
Beyond sectors, the team also evaluates bond structures and other characteristics. Coupon levels, call protection features, zero coupon versus traditional structures, and whether bonds are subject to the alternative minimum tax all factor into security selection. “There’s a lot of kinds of options in the muni market, and you kind of hit on inefficiency and taking advantage of that,” explains Weigold. In addition, the diversity of investor types in municipal bonds—insurance companies, banks, retail holders—creates varying price sensitivities and tendencies, he says. “We’re trying to play to that.”
And the continuous evaluation process never stops. “It is kind of a constant dynamic process where we’re looking at what’s done well, what’s done poorly that we think is going to do well, and then maybe shifting the portfolio around,” Weigold emphasizes.
The goal is steady, incremental value rather than dramatic swings. “We’re not trying to hit the cover off the ball. We’re trying to add a little bit more income, a little bit more total return,” he says. “Over time, that will give our shareholders, we think, the best experience in the product.”
The Research Edge: Turning Over Rocks in a Massive Market
With hundreds of thousands of securities in the municipal universe, research is both essential and impossible to fully exhaust. Weigold spent a decade as a research analyst before becoming a portfolio manager and highlights how critical that work remains today.
The team relies on dedicated research analysts who focus on the securities JHMU owns or considers buying. While the team can’t analyze every issuer and bond in depth—the market’s scale makes comprehensive coverage impossible—targeted research can create opportunities for insight other market participants might miss.
“I think the muni market’s interesting because of the massive number of different credits and probably fewer eyeballs on the market,” Weigold says. “If you can do that active research, if you can make the phone calls, turnover rocks, I think there’s some really interesting bonds that you can find out there.”
Identifying deteriorating credits early is especially important. “If a credit’s having problems and you can figure that out before the next guy and get out of it, that’s an advantage,” he explains. “If we can be in bonds that are going to perform better than our peers and maybe get out of the bonds that perform poorly, that’s half the battle in this.”
While JHMU’s municipal bond team operates as a relatively small group, operating within Manulife John Hancock Investments’ broader fixed income organization amplifies what the managers can accomplish. “Ultimately, we’re an insurance company, so we know bonds,” Weigold says, referencing the analytical tools, economic research, and fixed income specialists within Manulife as resources that support the team’s efforts.
The Active Management Case in Municipal Bonds
While indexing has reshaped many areas of fixed income, Weigold believes municipal bonds are uniquely complex—and uniquely suited to active strategies. He references Morningstar research that shows active municipal managers have historically outperformed their passive counterparts.
“I think there’s a very good reason for it,” he says. “Indexing is challenging. You’d have to have a lot of different bonds and a lot of different sectors—and still you have to do your research because I think you need to know what you own. And munis, that’s incredibly important.”
The fragmented issuer base, varying investor motivations, and structural complexity create an environment where research and active positioning can add value.
Understanding Municipal Market Dynamics: Supply, Demand, and Seasonal Patterns
Municipal bonds faced challenges in 2025, with the asset class underperforming through much of the year. Weigold attributes the weakness primarily to supply-demand imbalances rather than credit deterioration. “I would say up until about July, munis significantly underperformed, and that was a factor of excess supply in the market,” he says.
Infrastructure projects initially funded or planned during the COVID-19 pandemic are now coming to market, with costs significantly higher than originally estimated. “We’re seeing projects that the initial costs are maybe 20% or 30% less than they are now because of inflation,” Weigold explains.
As supply surged, investor caution—driven in part by debates about tax exemption—kept demand from keeping pace. After midyear, performance improved, but yields remained historically elevated.
Even so, as Weigold notes, “There’s nothing fundamentally wrong with our market from a credit perspective. It really was just a supply-demand dynamic.”
The construction boom reflects genuine infrastructure needs across the country—new terminals at airports, highway improvements, water and sewer system upgrades. “There’s a lot going on,” Weigold says. “And frankly, we have infrastructure needs in this country, and most of it is funded through the municipal market. So, it’s not a bad thing that we’re seeing the supply. I think it’s just a matter of whether the demand can absorb that supply.”
Seasonal patterns also shape returns. Historically, early year supply pressures performance, while summer and year-end tend to be stronger. Over the past 20 years, November has been negative only twice and December just once. While historical patterns don’t guarantee future results, the consistency is worth noting.
“Not that it’s always 100% correct, but it’s pretty close,” Weigold observes.
“Again, that’s the supply-demand dynamic. It’s a lot better for munis going into the end of the year where you start to see investors putting money back in, maybe doing some reallocation, some rebalancing, and then you have light supply.”
Municipal Credit Quality in Various Economic Environments
Weigold’s perspective centers on municipal bonds’ underlying revenue sources and their tendency toward greater independence from equity markets and broader economic cycles compared to corporate credit.
“Even as far as thinking about a recession or the economy slowing down, munis tend to do just fine in those situations,” he notes. Essential service revenue streams—property taxes, water and sewer charges, toll collections—tend to remain stable even when economic conditions weaken. “Probably even if things aren’t going well for you, you’re going to pay your property taxes. You’re going to pay your water bill. You’re going to pay your sewer bill. You’re driving down the turnpike, you’re going to pay your tolls.”
As a result, Weigold says, “We tend to be less correlated with the stock market and the economy than broader fixed income. You may not get the massive returns of the stock market, but that’s not why you’re in munis. You’re in munis to preserve your wealth. You’re in munis to stay rich, not get rich.”
Portfolio Positioning: Core Holdings Versus Satellite Allocations
When advisors consider where JHMU might fit within client portfolios, Weigold positions the fund as core municipal bond exposure rather than a specialized or satellite holding.
“I think it’s a core, and the reason I say that is because it’s got a little bit of everything,” he explains. Duration typically runs similar to the broader municipal market. Credit allocation—roughly 80–90% investment grade, 10–20% high yield—approximates market composition.
The intermediate part of the curve also provides what Weigold sees as the best balance between income and volatility. Instead of requiring multiple satellite funds, JHMU aims to incorporate marketwide exposures—sector diversification, credit flexibility, and duration management—into a single ETF. “We hopefully put it all in one place,” Weigold says. “So, you’re getting a little bit of everything. You don’t need to satellite anything here.”
After nearly three decades of working in municipal bonds, Weigold maintains enthusiasm for what the market continues to offer. “I’ve been doing this since 1998,” he says. “It’s a fantastic market. Always interesting, always dynamic, and having a dynamic manager is going to help you address the market.”
Weigold’s long view of municipal cycles reinforces his confidence in active management’s role. JHMU, as he sees it, is built to capture the value embedded in a complex market through careful security selection and tactical decisions made inside a tax-efficient structure.
“Ultimately, it just comes down to providing a good experience, a good solid return to our shareholders that’s in line with or better than the market,” Weigold says. “And that tax-free income, that’s what everybody’s here for, and we want to provide that.”
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Additional Resources
- Contact Manulife John Hancock Investments
- Manulife John Hancock Investments ETFs
- JHMU Investor Fact Sheet
- JHMU Summary Prospectus
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Disclosures
This commentary is provided for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. No forecasts are guaranteed. The information contained here is based on sources believed to be reliable, but it is neither all inclusive nor guaranteed by John Hancock Investment Management.
This material does not constitute tax, legal, or accounting advice, is for informational purposes only and is not meant as investment advice. Please consult your tax or financial professional before making any investment decisions.
John Hancock Investment Management is not affiliated with Wealth Advisor.
Ratings are from Moody’s, if available, and from Standard & Poor’s or Fitch, respectively, if not. When not available, internal ratings provided by the subadvisor are used. Ratings composition will change. Individual bonds are rated by the creditworthiness of their issuers; these ratings do not apply to the fund or its shares. U.S. government and agency obligations are backed by the full faith and credit of the U.S. government. All other bonds are rated on a scale from AAA (extremely strong financial security characteristics) down to CCC and below (having a very high degree of speculative characteristics). “Short-term investments and other,” if applicable, may include security or portfolio receivables, payables, and certain derivatives.
Duration measures the sensitivity of the price of bonds to a change in interest rates.
Investing involves risks, including the potential loss of principal. There is no guarantee that a fund’s investment strategy will be successful. Fixed-income investments are subject to interest-rate and credit risk; their value will normally decline as interest rates rise or if an issuer is unable or unwilling to make principal or interest payments. Investments in higher-yielding, lower-rated securities include a higher risk of default. Municipal bond prices can decline due to fiscal mismanagement or tax shortfalls, or if related projects become unprofitable. It’s possible that an active trading market for fund shares will not develop, which may hurt your ability to buy or sell fund shares, particularly in times of market stress. Trading securities actively can increase transaction costs, therefore lowering performance and taxable distributions. Liquidity—the extent to which a security may be sold or a derivative position closed without negatively affecting its market value, if at all—may be impaired by reduced trading volume, heightened volatility, rising interest rates, and other market conditions. To the extent that the fund invests in bonds that are subject to the alternative minimum tax (AMT), the income paid by the fund may not be entirely tax-free to all investors. Tender option bonds use leverage that magnifies both positive and negative returns, which increases the fund risk by magnifying the volatility of returns and could lead to termination of the Tender Option Bond trust. In that event, the fund may sell assets to purchase the trust’s floating-rate security, which could negatively affect fund performance or liquidate the trust’s assets. Fund distributions generally depend on income from underlying investments and may vary or cease altogether in the future. Shares may trade at a premium or discount to their NAV in the secondary market. These variations may be greater when markets are volatile or subject to unusual conditions. Please see the fund’s prospectus for additional risks.
Clients should read and carefully consider a fund’s investment objectives, risks, charges, and expenses before investing. To request a prospectus or summary prospectus with this and other important information, call us at 800-225-6020, or visit us at jhinvestments.com/etf.
John Hancock ETFs are distributed by Foreside Fund Services, LLC in the United States, and are subadvised by Boston Partners, Dimensional Fund Advisors LP, Marathon Asset Management, or our affiliates Manulife Investment Management (US) LLC, and CQS (US), LLC. Foreside is not affiliated with John Hancock Investment Management Distributors LLC, Manulife Investment Management (US) LLC, CQS (US), LLC, Boston Partners, Dimensional Fund Advisors LP, or Marathon Asset Management.
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY.
THIS MATERIAL IS FOR INSTITUTIONAL/BROKER-DEALER USE ONLY. NOT FOR DISTRIBUTION OR USE WITH THE PUBLIC.
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