“Some of the names we own are producing 30, 40, even 50 percent returns on the cash they reinvest in their business. If we can buy those at the right price, that’s where we want to be”

Brian Chan, Manulife Investments

“It’s not one person dictating what goes in or out. We deliberately rotate who chairs the meeting to get a fresh lens each week”

Patrick Blais, Manulife Investments

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Manulife Investments’ fundamental approach reaching global heights

Manulife Fundamental Equity Team’s proprietary process ranks quality and price with precision, offering advisors a differentiated, repeatable edge in a crowded field

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Patrick Blais

Manulife Investments

Brian Chan

Manulife Investments

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IN BASEBALL, stringing together singles can be just as decisive as a home run. The Blue Jays know that getting on base consistently can, over time, win games and sweep series. In portfolio management, the principle isn’t so different: a steady record of well-judged decisions can lead to durable, long-term success. If the headlines are to be believed, this is the most tumultuous economic time in recent memory. And that very well may be true. One thing, however, is not in question: inflation isn’t going away quietly. Price pressures are likely to remain volatile as economies absorb the aftershocks of global policy changes. For investors and the advisors who guide them, the challenge is to maintain that steady “on-base” approach, balancing resilience against an unpredictable backdrop while still positioning for long-term growth.

quality, valuation, and risk. At present, 37 holdings span seven of the 11 GICS sectors, with each selected for its ability to generate strong, sustainable cash flows and deliver acceptable returns without taking on undue risk. While the team has recently taken over the Manulife Fundamental Global Equity Fund, it shares approximately 80 percent portfolio overlap with the Manulife Climate Action Fund. Managed by the same team, the Climate Action Fund has delivered strong results since its inception in May 2021. That connection gives advisors a helpful reference point when evaluating the strategy. That said, the two funds differ in focus: the Manulife Climate Action Fund targets companies driving climate change mitigation while the Manulife Fundamental Global Equity Fund has a broader investment scope without a specific climate mandate.

That philosophy underpins the Manulife Fundamental Global Equity Fund, managed by senior portfolio manager Patrick Blais and portfolio manager Brian Chan of Manulife Investments’ eight-member Fundamental Equity Team. Rather than scatter capital across hundreds of positions, the fund concentrates on about 40 of what the managers consider their best ideas from around the world. “We think of it as a best-ideas portfolio,” Blais says. “Every name we own is there because we believe it represents one of the strongest opportunities available globally, right now.” These are companies that meet strict tests for

For Blais and Chan, the fund’s defining feature is not a preference for certain sectors or a static allocation. “This isn’t about avoiding one sector or drawing a hard line in the sand,” Blais says. “It’s about following the process. What does the process indicate we should do? Where does it point us to the best opportunity right now?” The team asserts “quality” is not a subjective label; it’s a measurable condition. Their investment process, honed over more than 15 years and recognized with multiple industry awards, begins with a simple question: How much real, recurring cash does this company produce, and how reliably can it keep doing so?

The starting point is sustainable free cash flow and high returns on invested capital stripped down to reveal the actual cash a business produces after funding its operations and growth. This approach allows the team to rank companies across geographies and industries on the same scale, comparing risk and reward without bias toward sector or market size. Chan notes that companies delivering 9 to 10 percent cash-on-cash returns are the baseline, but they often find firms generating far more. “Some of the names we own are producing 30, 40, even 50 percent returns on the cash they reinvest in their business,” he says. “If we can buy those at the right price, that’s where we want to be.” Technology often features in the mix, but not at any price. But when valuations in the sector became stretched in late 2023, the team reduced exposure and rotated capital into industrials and healthcare, where risk-adjusted prospects were stronger. When technology corrected in April, they re-entered select names, including Nvidia, at levels they considered defensible. Chan is quick to emphasize that this isn’t about avoiding fast-growing sectors. “If it pays to be in technology, we’ll be there,” he says. “But we’re not going to crowd into names where the fundamentals don’t support the price.”

While most investors and their advisors prefer to avoid volatility, Chan says the team embraces it. “Nobody likes to see big swings in their portfolio,” he admits. “But as portfolio managers, we’re not afraid of volatility because it creates opportunities. Our process is objective, and it helps us identify the best risk-reward situations when the market is unsettled.” For clients nearing retirement, volatility can carry higher stakes. “If you need to be selling to fund your lifestyle and the market takes a big hit, that can be very detrimental,” Chan notes. “That’s where our consistency and downside protection come into play.” Across their platform, the team has a record of outperforming in most down quarters − not just against the benchmark but against peers as well. “It’s not about avoiding risk altogether,” Blais adds. “It’s about avoiding risks that aren’t worth taking, so you protect capital when it matters most.”

The platform has earned industry recognition for its performance history. In 2024, three funds under the group’s management received LSEG Lipper Fund Awards, underscoring consistent, long-term results. Additionally, 13 of their funds were named FundGrade A+ award winners for the year. At the same time, they know investors don’t want to leave money on the table. “That’s why the process is so important,” Chan says. “You have to outperform on the downside to really be able to capture the upside afterwards.” By keeping losses contained, the team also preserves the flexibility to act when markets reset. “When tech corrected in April, we weren’t scrambling to cover losses,” Blais says. “We were ready to buy names we’d been watching, at prices we were happy to pay.” The sequence of cutting back on overheated tech, then re-entering at more attractive prices, illustrates the value of patience. “It’s about always putting yourself in a position to take advantage of opportunities, not just hoping they come when you’re ready.”

The team’s process is as much about how they decide as it is about what they decide. All eight members are analysts first, each responsible for

In a crowded field of active managers, Chan is well aware that the phrase “high-quality companies at a good price” is almost a cliché. “I don’t think any manager says they’re looking for low-quality businesses at a bad price,” he says with a laugh. “So what really differentiates us is our ability to quantify and measure quality and price.” That measurement starts with the team’s proprietary tangible free cash flow metric. “Quality for us isn’t just a checklist of qualitative traits like competitive advantage or barriers to entry,” Chan says. “Those things have to show up in the numbers − in the consistency, level, and repeatability of cash flows and returns on invested capital. If you can measure it, you can confirm it exists and you can rank companies against each other.”

Once the companies are ranked, the team compares quality to valuation, aiming to maximize quality for every dollar invested and return potential for every unit of risk. “There may be a list of great companies,” Chan points out, “but the question is: which one is better? That’s what our process is designed to answer.” Blais points to the team’s long-term track record as proof of concept. “We’ve been managing numerous retail funds for over a decade, and last year three of them won Lipper awards as the best in their category,” he says. “But for us, success isn’t just about the returns, it’s about delivering them consistently.”

MANULIFE FUNDAMENTAL EQUITY FUND

Manulife Investment Management is one of the largest asset managers in Canada, with $845 billion in assets under management as of March 2023. It’s a subsidiary of Manulife Financial Corporation, one of the largest financial services companies in Canada. Manulife Investment Management is an advocate for investing sustainably and aims to be a global leader in this area.

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Previously a member of the growth equity team, Patrick Blais is responsible for Manulife Investments’ Canadian core equity strategies. Prior to joining the firm, he was a portfolio manager and analyst at KBSH Capital Management, focusing on international equities, and before that he was a global senior equity and corporate debt analyst at Sun Life Financial. Blais holds the Chartered Financial Analyst designation and is a Fellow of the Society of Actuaries.

Manulife Investments

Patrick Blais

Brian Chan is a portfolio manager with Manulife Investments’ Fundamental Equity Team, responsible for fundamental equity strategies. Prior to joining the firm, he was with Standard Life Investments as an equity research assistant. Chan joined Manulife Investment Management when Standard Life’s Canadian operations were acquired by Manulife in January 2015. Earlier in his career, he worked at Dundee Securities as a research associate and at RBC Dominion Securities servicing high-net-worth individuals. Chan holds the Chartered Financial Analyst designation.

Manulife Investments

Brian Chan

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Fighting for the customer

The customer owned a bank saw a huge boost after the Hayne Royal Commission. One year on and their market share is growing as customer continue to see their value.

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Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

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Bank Australia

Fernando Lemos

Beyond Bank

Darren McLeod

In Partnership with

Fighting for the customer

The customer owned a bank saw a huge boost after the Hayne Royal Commission. One year on and their market share is growing as customer continue to see their value.

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Darren McLeod

Beyond Bank

Fernando Lemos

Bank Australia

Industry experts

Beyond Bank

Darren McLeod

Bank Australia

Fernando Lemos

Letting the process lead

Published October 6, 2025

Downside projection in negative markets

Excess returns relative S&P/TSX composite TR index during negative quarters

-1

Q2 2013

Q3 2014

Q2 2015

Q3 2015

Q4 2015

Q2 2017

Q1 2018

Q3 2018

Q4 2018

Q1 2020

Q2 2022

Q3 2022

Q3 2023

Q2 2024

Cumulative Exccess Returns

Manulife Fundamental Equity Fund (F) = 36.2%

Morningstar Cdn Equity Focused Category = 21.5%

“I don’t think any manager says they’re looking for low-quality businesses at a bad price. So what really differentiates us is our ability to quantify and measure quality and price”

Brian Chan, Manulife Investments

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Disclaimer Investing involves risks, including the potential loss of principal. Financial markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. About the Lipper Awards Methodology LSEG Lipper Fund Awards, © 2025 LSEG. All rights reserved. Used under licence. The LSEG Lipper Fund Awards, granted annually, highlight funds and fund companies that have excelled in delivering consistently strong risk-adjusted performance relative to their peers. The LSEG Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is an objective, quantitative, risk-adjusted performance measure calculated over 36, 60 and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the LSEG Lipper Fund Award. For more information, see lipperfundawards.com. Although LSEG Lipper makes reasonable efforts to ensure the accuracy and reliability of the data used to calculate the awards, their accuracy is not guaranteed. Manulife Fundamental Equity Fund - series FT6 was awarded the 2024 LSEG Lipper Fund Award in the Canadian focused equity category for the 10 year period and calculation periods are through the end of July 2024. The corresponding Lipper Leader ratings of the fund as of July 31, 2025, are as follows: N/A (1 year), 3 (3 years) [540 funds], 3 (5 years) [521 funds], 5 (10 years) [382 funds]. Manulife Fundamental Balanced Class - series FT6 was awarded the 2024 LSEG Lipper Fund Award in the Canadian equity balanced category for the 10 year period and calculation periods are through the end of July 2024. The corresponding Lipper Leader ratings of the fund as of July 31, 2025, are as follows: N/A (1 year), 5 (3 years) [323 funds], 4 (5 years) [289 funds], 5 (10 years) [219 funds]. Manulife Tactical Income Fund - series F was awarded the 2024 LSEG Lipper Fund Award in the tactical balanced category for the 3 year period and calculation periods are through the end of July 2024. The corresponding Lipper Leader ratings of the fund as of July 31, 2025, are as follows: N/A (1 year), 5 (3 years) [282 funds], 5 (5 years) [272 funds], 5 (10 years) [168 funds]. FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns net of fees and expenses payable by the fund (except for figures of one year or less, which are simple total returns) including changes in security value and reinvestment of all dividends/distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. The information provided does not take into account the suitability, investment objectives, financial situation, or particular needs of any specific person. All overviews and commentary are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, investment or legal advice. Clients and prospects should seek professional advice for their particular situation. Neither Manulife Investments, nor any of its affiliates or representatives (collectively Manulife Investments” is providing tax, investment or legal advice. This material is intended for the exclusive use of recipients in jurisdictions who are allowed to receive the material under their applicable law. The opinions expressed are those of the author(s) and are subject to change without notice. Our investment teams may hold different views and make different investment decisions. These opinions may not necessarily reflect the views of Manulife Investments. The information and/or analysis contained in this material has been compiled or arrived at from sources believed to be reliable, but Manulife Investments does not make any representation as to their accuracy, correctness, usefulness, or completeness and does not accept liability for any loss arising from the use of the information and/or analysis contained. The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline, or other expectations, and is only current as of the date indicated. The information in this document, including statements concerning financial market trends, are based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. Manulife Investments disclaims any responsibility to update such information. Manulife Investments shall not assume any liability or responsibility for any direct or indirect loss or damage or any other consequence of any person acting or not acting in reliance on the information contained here. This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife Investments to any person to buy or sell any security or adopt any investment approach, and is no indication of trading intent in any fund or account managed by Manulife Investments. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Diversification or asset allocation does not guarantee a profit or protect against the risk of loss in any market. Unless otherwise specified, all data is sourced from Manulife Investments. Past performance does not guarantee future results. This material has not been reviewed by, is not registered with any securities or other regulatory authority, and may, where appropriate, be distributed by Manulife Investment Management Limited. Manulife, Manulife & Design, Stylized M Design, and Manulife Investments are trademarks of The Manufacturers Life Insurance Company and are used by it and by its affiliates under license. 4747968

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Source: Manulife Investment Management, Morningstar Direct. For series F units of the fund. For illustration purposes only. As of June 30, 2025. Fund inception: August, 2003. Past performance is not indicative of future results. Negative quarter refers to when returns were negative for the S&P/TSX Composite Index during a particular quarter in a calendar year. Benchmark: S&P/TSX Composite TR Index. Formerly Manulife Canadian Stock Fund. Lead management assigned to Manulife Fundamental Equity Team in November 2012.

initiating coverage and maintaining research on a portion of the 300-company inventory from which the portfolio is built. Every week, the group meets to review both the holdings and the broader coverage list. Leadership of the meeting rotates, giving different perspectives a chance to guide discussion. “It’s not one person dictating what goes in or out,” Blais explains. “We deliberately rotate who chairs the meeting to get a fresh lens each week.” Ahead of those sessions, each company is profiled on a shared “target sheet” showing its cash-flow metrics, valuation, and risk profile. This is a structure that allows all members to weigh in, even on names not directly under their purview. “If someone spots a change in fundamentals or valuation on a name they don’t cover, we want that perspective in the room,” Chan says. Disagreement is encouraged. “We have honest, clear discussions, and if we can’t get to consensus, we’ll have everyone send in their proposals individually so we don’t fall into groupthink,” Blais notes. “That way every voice is heard, and the best-supported ideas tend to rise to the top.” This collaborative design is a form of risk management. “Eight sets of eyes are better than one,” Blais says. “It helps us respond quickly to changes in the market and make decisions with conviction.”