Key Takeaways
- • John Hancock Seaport Long/Short Fund generated positive returns in Q4 2025 but underperformed the MSCI World Index benchmark as global equities rallied to all-time highs.
- • Short positions became a material drag on performance in the rising market environment, offsetting gains from long exposure.
- • Net long exposure declined modestly from 53% to 50%, indicating the fund reduced risk positioning in response to evolving market conditions.
- • Global equity strength was driven by positive economic growth expectations and continued central bank interest-rate cuts, which supported broad market appreciation across developed and emerging markets.
Summary
The John Hancock Seaport Long/Short Fund delivered positive absolute returns during Q4 2025, participating in a broad-based equity rally that carried major indexes to record highs. However, the fund's performance lagged its MSCI World Index benchmark, a headwind attributable primarily to the fund's short positions, which deteriorated as the broader market environment favored risk-on positioning. The fund's inability to keep pace with its benchmark underscores a structural challenge inherent to long/short strategies during periods of sustained market strength: short hedges, designed to cushion downside, become performance detractors in rising markets.
Market conditions during the period were supportive of risk assets. Central banks maintained an accommodative policy stance, with continued interest-rate cuts reinforcing investor confidence in global economic growth prospects. This backdrop lifted both developed-market and emerging-market equities, contributing to the synchronized rally that drove indexes to new highs. The fund's net long exposure—which stood at 53% at the period's outset—declined modestly to 50%, reflecting a deliberate reduction in net risk positioning as portfolio managers responded to the shifting market environment. This tactical adjustment suggests the fund's management sought to temper exposure amid the evolving macroeconomic landscape, though the timing did not provide sufficient protection or reduced short drag to match benchmark performance.
The fund's positioning underscores the tactical challenge long/short managers face when market momentum remains strong: increasing net long exposure risks concentration in a concentrated rally, while maintaining higher short exposure limits gains. The Q4 2025 results illustrate that even positive absolute performance may disappoint relative to simple long-only benchmarks during risk-on periods, a dynamic that has characterized long/short fund returns in recent years.
Market conditions during the period were supportive of risk assets. Central banks maintained an accommodative policy stance, with continued interest-rate cuts reinforcing investor confidence in global economic growth prospects. This backdrop lifted both developed-market and emerging-market equities, contributing to the synchronized rally that drove indexes to new highs. The fund's net long exposure—which stood at 53% at the period's outset—declined modestly to 50%, reflecting a deliberate reduction in net risk positioning as portfolio managers responded to the shifting market environment. This tactical adjustment suggests the fund's management sought to temper exposure amid the evolving macroeconomic landscape, though the timing did not provide sufficient protection or reduced short drag to match benchmark performance.
The fund's positioning underscores the tactical challenge long/short managers face when market momentum remains strong: increasing net long exposure risks concentration in a concentrated rally, while maintaining higher short exposure limits gains. The Q4 2025 results illustrate that even positive absolute performance may disappoint relative to simple long-only benchmarks during risk-on periods, a dynamic that has characterized long/short fund returns in recent years.
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