Key Takeaways
- • John Hancock Seaport Long/Short Fund delivered positive Q4 2025 returns but underperformed its benchmark, the MSCI World Index, as global equities rallied to all-time highs.
- • Short positions proved to be a headwind during the rising market, dragging overall fund performance as equity indexes climbed on positive growth expectations and central bank interest-rate cuts.
- • Net long exposure contracted from 53% to 50%, signaling a modest reduction in risk positioning as portfolio managers responded to evolving market conditions.
- • Global equities, particularly international and emerging markets, drove significant gains in 2025, creating headwinds for the fund's defensive short portfolio.
Summary
The John Hancock Seaport Long/Short Fund posted positive returns in Q4 2025 but failed to match the performance of its MSCI World Index benchmark during a period of robust global equity appreciation. Major equity indexes climbed to all-time highs in the quarter, supported by positive economic growth signals and continued interest-rate reductions from central banks worldwide, which bolstered investor confidence in the global economic outlook.
The fund's underperformance relative to its benchmark was primarily attributable to its short positions, which generated losses in the rising market environment. As broad equity markets advanced, the fund's defensive short exposure worked against it, creating a drag on overall performance. This dynamic illustrates the challenge long/short funds face when markets experience sustained rallies—short positions, while providing portfolio downside protection and diversification during selloffs, become liabilities during pronounced bull markets.
In response to the evolving market landscape, the portfolio management team reduced net long exposure from 53% to 50%, reflecting a modestly more conservative positioning. This adjustment suggests managers are exercising caution despite the strong equity rally, potentially in anticipation of shifting market conditions or to better manage risk given elevated valuations. The tactical reduction maintains meaningful long exposure while decreasing overall portfolio leverage, striking a balance between capturing continued upside potential and protecting against downside risks.
A major theme of 2025 was the significant revival of international equity markets, including both developed-market and emerging-market stocks, which outpaced historical correlations and contributed materially to the benchmark's strong performance. This international strength further pressured the fund's relative returns given its mixed positioning across geographies and its net short allocation, which did not benefit proportionally from the global equity recovery.
## KEY TAKEAWAYS JSON
The fund's underperformance relative to its benchmark was primarily attributable to its short positions, which generated losses in the rising market environment. As broad equity markets advanced, the fund's defensive short exposure worked against it, creating a drag on overall performance. This dynamic illustrates the challenge long/short funds face when markets experience sustained rallies—short positions, while providing portfolio downside protection and diversification during selloffs, become liabilities during pronounced bull markets.
In response to the evolving market landscape, the portfolio management team reduced net long exposure from 53% to 50%, reflecting a modestly more conservative positioning. This adjustment suggests managers are exercising caution despite the strong equity rally, potentially in anticipation of shifting market conditions or to better manage risk given elevated valuations. The tactical reduction maintains meaningful long exposure while decreasing overall portfolio leverage, striking a balance between capturing continued upside potential and protecting against downside risks.
A major theme of 2025 was the significant revival of international equity markets, including both developed-market and emerging-market stocks, which outpaced historical correlations and contributed materially to the benchmark's strong performance. This international strength further pressured the fund's relative returns given its mixed positioning across geographies and its net short allocation, which did not benefit proportionally from the global equity recovery.
## KEY TAKEAWAYS JSON
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