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John Hancock Preferred Income Fund
The John Hancock Preferred Income Fund (HPI) launched in July 2002 and is structured as a closed-end management investment company advised by John Hancock...
John Hancock Preferred Income Fund
The John Hancock Preferred Income Fund (HPI) launched in July 2002 and is structured as a closed-end management investment company advised by John Hancock Investment Management LLC, with Gregory Phelps and Joseph Bozoyan serving as the named portfolio managers. The fund's wealth origin is not defined by a single family or private fortune; it is a publicly traded vehicle that pools capital from retail and institutional shareholders. HPI pursues current income by investing at least 80% of its assets in preferred stocks and other fixed-income securities, including those rated below investment grade. The portfolio spans the capital stacks of financial institutions, insurance companies, real estate investment trusts, and utilities — names that have historically included JPMorgan Chase, MetLife, and AT&T. The fund makes heavy use of auction-rate preferred and other institutional series, distinguishing it from open-end peers that focus on retail-accessible exchange-traded equivalents. As a closed-end fund, it employs leverage to magnify distributable income, a structural decision that raises its yield profile but also heightens sensitivity to short-term rate movements and credit events. Total net assets and the fund's market capitalization vary with portfolio valuation and share issuance since HPI trades on the New York Stock Exchange. The vehicle does not operate satellite offices or related philanthropic arms — it is a single-purpose registered investment company. In May 2024, John Hancock published a semi-annual report detailing the fund's continued emphasis on floating-rate and fixed-to-floating-rate preferred structures as a hedge within the rate cycle (per the firm's official report, May 2024). HPI's defining architecture is its closed-end wrapper. Unlike an ETF or open-end mutual fund, the share price can diverge materially from net asset value, creating discount or premium entry points that institutional buyers monitor. This structure, combined with a mandate that permits deep penetration into thinly traded institutional-preferred series, gives HPI a sourcing footprint that retail-format preferred funds lack.
General information
Firm type
Asset Manager
Year founded
2002
AUM
Undisclosed
Location
Region
North America
Country
United States
City
Boston
Corporate office
Boston, MA, United States
Principals
Gregory A. Phelps
Portfolio Manager
Joseph H. Bozoyan
Portfolio Manager
Sector focus
Frequently asked questions
Who makes investment decisions for the John Hancock Preferred Income Fund?
Portfolio managers Gregory A. Phelps and Joseph H. Bozoyan jointly manage HPI, as they have for at least the last decade according to the fund's regulatory filings and shareholder reports. Both are senior members of the John Hancock fixed-income platform, which sits within Manulife Investment Management. Their decision-making authority covers security selection, sector allocation, leverage levels, and duration management within the fund's 80% preferred-securities mandate.
How does the closed-end structure affect an investment in HPI?
Because HPI is a closed-end fund, its shares trade on the NYSE at a market price that may be above or below the fund's net asset value. This structure allows the fund to employ leverage using preferred shares or reverse repurchase agreements without facing daily shareholder redemptions, which can sustain higher income distributions. The trade-off is that an investor's total return depends on both the performance of the underlying preferred holdings and the movement of the share price relative to NAV.
What types of preferred securities does HPI hold?
HPI invests in both fixed-rate and floating-rate preferred stocks, with a heavy representation in institutional-series securities issued by banks, insurers, REITs, and utilities. Common holdings include the preferred shares of large US financial institutions, along with trust preferreds and contingent-capital instruments. The fund also allocates to below-investment-grade preferreds when the credit risk is deemed compensated by the yield.
Does the fund use leverage, and what are the risks?
Yes, HPI regularly employs leverage through auction-rate preferred shares or other borrowings to amplify the yield on its portfolio. This increases distributable income but magnifies the impact of interest-rate changes, credit default, or a decline in the market value of the underlying holdings. In a rising-rate environment, the cost of leverage can compress net income, while in a credit event, leverage accelerates loss on invested equity.
How is HPI different from a preferred-stock ETF like PFF?
Unlike PFF, which tracks an index of exchange-traded preferreds and means zero leverage, HPI's portfolio team selects securities and can hold large positions in unlisted institutional preferreds that an index ETF cannot access. The fund also distributes income amplified by leverage. Additionally, because HPI is a closed-end fund, its share price can trade at a discount to NAV, creating entry opportunities not available in an ETF structure.
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