Advisors know the fixed-income staples: Treasuries, corporate bonds, maybe a dash of high yield. But a massive segment of the bond market—the securitized universe—remains significantly underused in many portfolios.
The John Hancock Mortgage-Backed Securities ETF (ticker: JHMB) is built to change that. The strategy targets agency mortgage-backed securities (MBS) and securitized credit, aiming to provide income, diversification, and a professional approach to one of the bond market’s largest but least accessed segments. JHMB managed $155.05 million in assets as of September 10, guided by a team with more than 50 years of combined experience.
In an interview with The Wealth Advisor’s Scott Martin, David Bees, Portfolio Manager, Securitized Assets, at Manulife Investment Management discussed how JHMB is designed to give investors efficient access to securitized markets and why active management plays such an important role. His perspective shows how advisors might integrate securitized credit into client portfolios without adding unnecessary complexity.
The Overlooked Giant of Securitized Credit
Few markets are as large and important as securitized credit, yet it remains surprisingly overlooked. The securitized universe—encompassing agency mortgage-backed securities and securitized credit—represents one of the largest segments of the bond market, rivaling many better-known sectors in size and scope.
Despite the scale, most portfolios hold very little exposure. “Based on the sheer size of these securitized markets, we think many clients are underinvested in this part of the market,” Bees explains. While the sector can seem complex, he notes that much of it comes down to “bonds that finance the American consumer,” from mortgages backed by government agencies to auto loans and even cell phone payment plans.
The market extends further into commercial real estate—think trophy hotels, multifamily properties, and industrial warehouses—breadth that can create opportunities for skilled managers to find value across diverse collateral types.
JHMB’s Strategic Framework
JHMB is built to balance safety with opportunity. At least 80% of assets sit in mortgage-backed securities, and no less than 50% of the portfolio is invested in bonds guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae, Bees points out. The rest can be allocated to asset-backed securities in areas such as autos, credit cards, or digital infrastructure.
The large agency component provides a high-quality foundation of conforming loans that anchor the global credit market. At the same time, the strategy retains flexibility to pursue opportunities across a range of risks while holding to an investment-grade mandate.
“The portfolio does have some flexibility to invest across the quality spectrum to take advantage of attractive opportunities, but it must always maintain an investment-grade portfolio rating,” Bees notes.
Because securitized assets encompass various types of securitized credit, the market demands specialized research and experienced oversight to fill gaps for even the most seasoned advisors or investors.
“We tend to find that it’s a part of the market that people aren’t as familiar with,” adds Bees. With collateral types ranging from residential mortgages to commercial loans, investors need specialists who can parse prepayment risks, structures, and deal features. “It’s best accessed through an actively managed product by a company that has the dedicated research staff to do the due diligence on the underlying assets,” he explains. “And that’s what we’re providing here. And it’s sort of all rolled up to make it easy for an advisor.”
The Case for Active Over Passive
Passive mortgage ETFs come with limitations that can weigh on returns. Bees points out that index-based products are dominated by agency MBS, particularly those tied to mortgages originated during the pandemic when interest rates were near zero. “That means the majority of the index today is still skewed toward those lower-coupon, lower-yielding mortgages, and that’s not necessarily what you want,” he says.
Active management avoids this trap and brings an additional layer of precision. Portfolio managers can selectively overweight higher-yielding segments, identify pools with more attractive prepayment characteristics, and avoid lower-quality structures that passive strategies must hold. “We don’t need to buy everything,” Bees observes. “We can be very selective. We can underweight those less desirable portions of the market, and we can overweight the more desirable characteristics.”
For JHMB, that means not only picking the right securities but also managing sector weights and structural exposures. For example, the team can favor pools with lower loan balances or specific geographic exposures while sidestepping weaker segments. The flexibility also allows for better timing, as the managers can adjust allocations when relative values shift—something a passive index cannot replicate. “Active management provides us the ability to select the best securities, the best structures, and the best sectors within the securitized market,” he says.
Making a Complex Market Accessible
Securitized credit can feel opaque, even to experienced investors. Many advisors avoid it altogether, fearing complexity or lack of transparency. With JHMB, Manulife John Hancock Investments aims to open the door by packaging securitized exposures into a more liquid, transparent ETF vehicle, making the segment more accessible for advisor use—providing entry into what Bees calls a market niche where “some of those more unique investment opportunities lie.”
One area drawing attention is digital infrastructure. Rather than betting on which technology companies may dominate the future, securitized credit allows exposure to the support systems—data centers, fiber networks, and cell towers—that all players may need.
“No matter who becomes that dominant player, they’re going to need this underlying infrastructure to support the market,” Bees notes.
Securitized credit also brings in floating-rate exposure. During the Federal Reserve’s 2022 hiking cycle, floating-rate structures tended to boost income while much of the fixed-rate bond market suffered.
“So, there’s another tool in our toolbox to help manage the portfolio through a different interest rate environment,” Bees says. “So, a lot of different benefits of accessing that securitized credit market.”
A Case for Securitized Assets Now
Today’s yields make securitized assets particularly attractive. Historically, corporate bonds offered about 50 basis points more yield than agency MBS, Bees points out. Now, yields are nearly identical, creating opportunities to reallocate without sacrificing income.
“Right now, we think that you can shift some of your allocation from corporate bonds into agency MBS and securitized credit—you don’t give up any income, you don’t give up any yield, and you may actually be able to reduce some of your risk within your portfolio,” he explains.
The portfolio manager points to historical yield relationships as evidence of current market attractiveness, noting that the convergence represents a shift from long-standing patterns.
“I think it’s a great time to get involved in this market, definitely from sort of looking back over the past 25 years and where yields have been and where they are relative to corporate bonds,” Bees says. “It looks like a pretty attractive entry point.”
Agency MBS can also bring strong liquidity—second only to Treasuries—helping keep transaction costs low. For advisors, that means an opportunity to enhance portfolio efficiency while maintaining or potentially improving risk-adjusted returns. “It’s pretty attractive right now from a long-term perspective,” adds Bees.
The Underrepresented Opportunity
Scale, diversity, and liquidity rarely converge in a single market segment, yet securitized assets can offer all three while remaining dramatically underrepresented in most client portfolios. Trillions in assets finance essential consumer and commercial activities while many portfolios lack meaningful exposure to securitized assets beyond basic agency MBS holdings.
JHMB may help bridge the allocation gap through institutional-quality management, dedicated research infrastructure, and mandate flexibility that spans the securitized spectrum. The fund aims to preserve investment-grade quality standards while emphasizing risk mitigation and consistent income generation.
Securitized markets offer what Bees characterizes as an underrepresented sector that remains “large,” “diverse,” and “very liquid”—one he believes can “add yield while minimizing risk in portfolios.”
For clients seeking income, diversification, and resilience in fixed income, securitized credit may represent the next frontier—and JHMB offers a ready-made option that seeks to deliver all three.
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Disclosures
Diversification does not guarantee a profit or eliminate the risk of a loss.
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. 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. A fund that effects creation and redemption transactions using cash may be less tax-efficient than a fund that effects all of its creation and redemption transactions in-kind. Mortgage- and asset-backed securities may be sensitive to changes in interest rates and may be subject to early repayment and the market’s perception of issuer creditworthiness. 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. A portfolio concentrated in one sector or that holds a limited number of securities may fluctuate more than a diversified portfolio. Foreign investing, especially in emerging markets, has additional risks, such as currency and market volatility and political and social instability. The use of hedging and derivatives could produce disproportionate gains or losses and may increase costs. Fund distributions generally depend on income from underlying investments and may vary or cease altogether in the future. Investments in higher-yielding, lower-rated securities include a higher risk of default. 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.
JHS-796956-2025-08-29 09/25
