Key Morningstar Metrics for Manulife U.S. Equity Fund
- : NeutralMorningstar Medalist Rating
- : AverageProcess Pillar
- : Above AveragePeople Pillar
- : Above AverageParent Pillar
A replenished analyst team bodes well for lead manager Grayson Witcher, though his conservative approach has increasingly put Manulife US Equity at odds with peers employing a more holistic framework. This strategy is also available as Mawer US Equity.
The strategy uses Mawer’s main investment philosophy: Identify wealth-creating companies run by strong management teams capable of outperforming a benchmark over the long term. Managers and analysts at the firm record all their due diligence and portfolio management decisions in a centralized database. After a report is written, different individuals will score various aspects like management quality and durability of a company’s economic moat, which then produces a quality score. A Monte Carlo simulation based on key assumptions by the analyst gives a range of intrinsic values for a stock.
Witcher has room to operate in this framework. A matrix plots out the strategy’s investable coverage of US stocks along with their quality score and potential return, which helps suggest portfolio weights. But he doesn’t have to follow those suggestions or even analyst recommendations; areas of disagreement include semiconductors and the theme of artificial intelligence. Witcher tends to steer away from names with outsize growth expectations despite his colleagues’ favorable views of their quality, which so far has offset the advantages of a collaborative process.
At the same time, a focus on minimizing risk has led to a key divergence from the benchmark. The strategy has a 6% limit on individual positions, a sensible line for a diversified portfolio. However, with the increase in concentration of the strategy’s S&P 500 benchmark, it also caps holdings in Microsoft, Alphabet, and Nvidia (all in the portfolio as of April 2026). This, in part, has led to a growing size bias in the strategy and diminished quality metrics like return on invested capital against the S&P 500, as these mega-caps have strong growth and profitability traits. This continues to leave the portfolio vulnerable should artificial intelligence winners continue to lead the US market. However, it could pay off should current trends reverse.
Witcher has led this strategy for more than 15 years, though the team around him has changed materially. The departure of comanager Colin Wong and an analyst in October 2024 temporarily reduced his dedicated staff to two. Two analysts have since transferred from the firm’s global-equity team, and Witcher now engages regularly with global-equity lead Paul Moroz as a sounding board. The overall team remains in good shape, given Witcher’s leadership and some fortifications.
Despite recent short-term underperformance, Witcher’s full tenure has been successful. Over the 15 years ended April 2026, Mawer US Equity’s A share class returned 13.9%, which beat more than 65% of US equity Morningstar Category peers. The fund’s beta—a measure of benchmark sensitivity—was lower than 65% of category peers, meaning it has delivered superior risk-adjusted results. This smoother journey has at times come at the cost of upside participation, especially since 2024, in the midst of a US stock rally.
Manulife U.S. Equity Fund: Performance Highlights
A poor three years have dimmed but not extinguished this strategy’s long-term success.
Investors have had a smooth journey over the long term to this point. Over the 15 years ended April 2026, Mawer US Equity’s A share class returned 13.9%, which was better than 65% of US equity category peers. This was also done with a lower sensitivity to the fund’s benchmark: the S&P 500. The fund’s beta (a measure of sensitivity to the benchmark) was 0.83, lower than 65% category peers. This has hampered absolute returns—the fund trailed its S&P 500 benchmark by 2.7 percentage points annualized—but not its risk-adjusted returns.
The fund’s defensive merits sometimes came at the cost of upside participation. It captured less than 83% of the S&P 500’s losses over the past 15 years, but also only captured slightly more than 83% of that index’s gains. Both were less than the median category peer. Indeed, the fund tended to shine when markets faltered. For instance, from Feb. 2, 2025, through April 8, 2025, Mawer US Equity’s A share class lost 13.0%, which was 6.3 percentage points narrower than the S&P 500 in Canadian dollar terms. The fund trailed that index by a cumulative 26.1 percentage points in the subsequent rally through April 2026.
A combination of omissions and commissions dragged on recent performance. Both poor selection within and an underweighting in technology stocks detracted over the year ended April 2026. An overweighting in healthcare—particularly insurance companies and medical device manufacturers—added further pressure. The A share class returned 8.4% over the year ended April 2026, trailing more than 90% of category peers and lagging the S&P 500 by 20.7 percentage points. However, should the market’s recent rapid ascent reverse course, the fund should claw back to the ground.
