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Advisors today face a triple challenge: volatile markets, income-seeking clients, and portfolios under constant scrutiny.
That’s one reason active exchange-traded funds (ETFs) are gaining traction. They combine the flexibility of active management, along with the diversification it brings to the table, as well as the benefits of an ETF’s transparency and intra-day liquidity. Unlike traditional index products, they also allow professional managers to sidestep lagging sectors or companies.
More and more, advisors turn towards actively managed ETFs as a way to lower fees, avoid the blind spots of passive strategies and position portfolios to optimize the opportunity for potentially superior risk-adjust returns.
Manulife’s Smart ETFs are built on this principle. They apply disciplined, active strategies designed to help advisors manage risk, capture opportunities and meet client goals for income, stability and diversification.
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Unlike passive ETFs, which track a defined index, active ETFs can deviate from benchmarks and adapt their holdings based on market conditions. This flexibility has proven to be a significant advantage, especially when navigating uncertain or volatile environments.
Passive ETFs may leave advisors locked into yesterday’s winners, while active ETFs allow managers to anticipate tomorrow’s challenges. Active ETFs help advisors quickly and easily adjust portfolios in response to change. They can shift holdings when risks or opportunities emerge, and help protect portfolios in down markets. Transparent holdings and familiar ETF structures make active ETFs easy to explain to clients.
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While passive ETFs remain a popular choice with investors, they do have structural limitations, especially when it comes to Canadian fixed income and dividend categories.
Index constraints: A passive fund must hold all securities in the index or other benchmark, even if some currently underperform.
Weighting challenges: Some passive dividend ETFs are dividend yield weighted, just as some fixed income ETFs are debt-weighted, resulting in potentially less-than-optimal exposure for investors.
Concentration risk: Certain sectors might dominate an index, creating an unbalanced portfolio exposed to unnecessary risk.
Manulife’s active management approach addresses these challenges. Its Smart ETFs are built on disciplined strategies that aim to deliver income, manage risk and enhance diversification without being tied to an index’s limitations.
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Many advisors’ clients, particularly retirees and income-focused investors, have specific goals that require a carefully balanced portfolio, and these clients want active ETFs among their holdings. Designed with these needs in mind, Manulife Smart ETFs help advisors address three points simultaneously, providing another investment option for portfolios designed to support income needs without overexposure to market risk.
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First, these ETFs were created to offer income generation for clients seeking reliable cash flow and an attractive total-return over longer periods of time. Second, their active oversight is intended to stabilize portfolio performance during volatile markets, helping improve the overall client investment experience. And third, covering a broad range of asset classes and geographic areas, they also enhance diversification, giving clients exposure to opportunities extending beyond the limits of traditional index strategies.
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Depending on your clients’ goals, a Manulife Smart ETF could make sense. Learn more about these unique active ETFs.
IDIV.B: Smart International Dividend ETF. Help clients access global dividend opportunities with a disciplined, active approach.
CDIV: Smart Canadian Dividend ETF. Support income-seeking clients with a Canadian dividend strategy designed for long-term growth and stability.
BSKT: Smart Core Bond ETF. A core fixed income solution for clients who value stability, income, and active risk management.
TERM: Smart Short-Term Bond ETF. A short-term bond strategy for clients seeking lower duration risk and capital preservation.
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In a competitive advisor market, you want to stand out from your peers. The ability to offer a low-cost active investing strategy that goes beyond simple index fund ETFs can help set you apart.
Active ETFs let financial advisors offer the benefits of professional oversight in a transparent ETF package while aligning solutions directly with a client’s specific income, growth or preservation goals. Advisors access the resources, research and compliance infrastructure of an established brand like Manulife. This combination of active management and brand trust may help strengthen client relationships and demonstrate added value.
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Here are examples of how to integrate Manulife Smart ETFs into your client portfolios.
Retiree seeking steady income and stability: provide dividend income or the safety net of investment-grade bonds through BSKT.
Client seeking international growth opportunities: introduce a disciplined global dividend approach with IDIV.
Looking for Canadian Equity exposure without the sector and stock concentration of a passive strategy: use CDIV to diversify your Canadian equity exposure without doubling down on the most popular names found within most portfolios.
Conservative investor concerned about interest rate risk: suggest TERM as a short-term bond strategy with lower duration exposure.
By tailoring ETF choices to client needs, advisors can build goal-focused and adaptable custom portfolios.
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As market conditions evolve, active ETFs offer a flexible, transparent and disciplined way to help meet client goals. They give advisors additional options to proactively manage risk and position portfolios for growth and advantages that passive funds simply can’t replicate.
Manulife’s Smart ETFs bring together active management, income-focused strategies and a commitment to stability and diversification, making them valuable tools for advisors seeking to deliver better outcomes.
Discover actively-managed ETF solutions for today’s market.
Manulife ETFs are managed by Manulife Investments. Manulife Investments is a trade name of Manulife Investment Management Limited.
Investing involves risks, including the potential loss of principal. There is no guarantee that a fund’s investment strategy will be successful. Foreign investing has additional risks, such as currency and market volatility and political and social instability. Large company stocks could fall out of favor, and illiquid securities may be difficult to sell at a price approximating their value. Shares may trade at a premium or discount to their NAV in the secondary market, and a fund’s holdings and returns may deviate from those of its index. These variations may be greater when markets are volatile or subject to unusual conditions. Errors in the construction or calculation of a fund’s index may occur from time to time. Please see the fund’s prospectus for additional risks. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. These risks are magnified for investments made in emerging markets. Currency risk is the risk that fluctuations in exchange rates may adversely affect the value of a portfolio’s investments. The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person. You should consider the suitability of any type of investment for your circumstances and, if necessary, seek professional advice.
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