The John Hancock Infrastructure Fund recently concluded its third quarter of 2025, experiencing a positive performance. Despite achieving gains, the fund's growth did not quite align with the broader market's expansion during this period. The core investment philosophy of the fund emphasizes generating robust absolute returns over extended timeframes, a strategy that occasionally diverges from the immediate pace set by market indices. This quarter's activity reflects a careful balancing act between capitalizing on market opportunities and adhering to its long-term objectives. The broader global equity markets demonstrated significant upward momentum, largely fueled by impressive corporate earnings reports, substantial investments in artificial intelligence infrastructure, and a notable shift towards a more accommodating monetary policy in the United States. These elements collectively shaped a dynamic market landscape, influencing the fund's strategic decisions and portfolio adjustments.
During the third quarter of 2025, global equities experienced a substantial upturn. This positive movement was primarily attributed to several key factors: robust corporate earnings reports, ongoing and significant spending on artificial intelligence (AI) infrastructure, and a notable shift in the U.S. monetary policy towards a more dovish stance. Additionally, improvements in international trade relations further contributed to the optimistic market sentiment. These combined forces created a buoyant environment for investors, driving strong performance across various sectors.
Against this backdrop, the John Hancock Infrastructure Fund, while registering a gain, found itself trailing the broader market's impressive rally. This underperformance relative to its benchmark, the MSCI All Country World Index, highlights a strategic distinction. The fund's primary objective is to deliver positive absolute returns over the long term, rather than merely tracking or outperforming a specific index on a quarterly basis. This long-term perspective often means that the fund's short-term movements may not always mirror the immediate market trends.
The management team engaged in several strategic portfolio adjustments during the quarter to align with this long-term vision and optimize the fund's risk/reward profile. One significant move was the initiation of a new position in SSE PLC. This decision was driven by an assessment that uncertainties surrounding SSE's funding for its regulated U.K. networks and renewable energy projects had created an attractive entry point, suggesting a potential undervaluation of its assets. This acquisition aimed to capitalize on perceived mispricing and enhance future returns.
Conversely, the fund also made decisions to trim or sell certain holdings where the risk/reward profiles were deemed less compelling. Specifically, positions in Iberdrola SA and Pembina Pipeline Corp. were reduced. Furthermore, the fund completely divested from RWE AG. These actions were part of a disciplined approach to reallocate capital to other opportunities that offered more favorable potential returns relative to their associated risks, thereby ensuring the portfolio remained aligned with the fund's strategic objectives and prevailing market conditions.
Ultimately, the fund's performance in Q3 2025 and its strategic maneuvers underscore its commitment to a long-term investment horizon, prioritizing sustainable absolute returns over immediate index comparisons. The commentary highlights a meticulous approach to portfolio management, adapting to market dynamics while steadfastly pursuing its foundational investment principles, ensuring the fund is well-positioned for future growth despite quarterly fluctuations.