Hartford Funds Expands Systematic ETF Business
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Insights
The expansion of Hartford Funds' systematic ETF product suite is a strategic move aimed at capitalizing on the growing demand for diversified investment vehicles. The launch of the Hartford Multifactor International Small Company ETF (ROIS) is particularly noteworthy as it targets the small cap international equity market, a segment that is often underrepresented in investors' portfolios. By focusing on systematic factors such as Size, Value, Quality and Momentum, Hartford Funds is positioning itself to offer products that may appeal to investors looking to mitigate risk and enhance returns in a volatile market. This is especially relevant given the current economic climate, characterized by uncertainties due to geopolitical tensions, inflationary pressures and concerns over interest rate hikes.
From a market perspective, the diversification benefits of multifactor ETFs can be substantial. They offer a methodical approach to asset allocation, which can be more appealing during times of market stress. Additionally, the proprietary multifactor investment approach indicates a tailored investment strategy that could differentiate Hartford Funds from competitors. The long-term implications for stakeholders include potential for improved risk-adjusted returns and a stronger presence in the niche market of systematic investing.
The introduction of these new ETFs by Hartford Funds reflects an investment product innovation that may influence the firm's financial performance. Systematic ETFs, by design, aim to provide cost-efficient exposure to various market segments while attempting to optimize returns based on specific factors. This can potentially attract a wide range of investors, from retail to institutional, who seek to diversify their portfolios without the need to actively manage their investments. The new ETFs, particularly ROIS, expand the firm's offerings and could lead to increased assets under management (AUM), thereby generating higher fee-based revenue.
Investors should be aware that while multifactor ETFs aim to provide enhanced returns, they also come with their own set of risks. The success of these ETFs in attracting investments will depend on their performance relative to traditional market-cap-weighted indexes and active management strategies. It will be important to monitor the adoption rate of these ETFs and their performance track record over time to assess the impact on Hartford Funds' market share and financial health.
The strategic decision by Hartford Funds to grow its systematic ETF offerings aligns with broader industry trends towards passive and factor-based investment strategies. The multifactor approach is designed to offer investors a more nuanced alternative to traditional index funds, potentially providing an edge in asset allocation. The introduction of ETFs like ROIS could be seen as a response to the market's increasing preference for investment strategies that are not only cost-effective but also sophisticated enough to navigate complex market dynamics.
For investors, the key benefit lies in the potential for enhanced portfolio construction. By incorporating factors such as Size, Value, Quality and Momentum, these ETFs are structured to exploit certain market inefficiencies. However, it's important to note that the efficacy of these factors can vary over time and across different market cycles. Investors and advisors will need to continuously evaluate the performance of these factors in relation to current market conditions. In the long-term, the success of Hartford Funds' systematic ETFs will hinge on their ability to consistently deliver on their value proposition in various market environments.
Firm’s introduction of three new systematic ETFs demonstrates its deep commitment to systematic investing
This latest product launch follows the introduction of the Hartford US Value ETF (Cboe: VMAX) and Hartford US Quality Growth ETF (Nasdaq: HQGO) in December 2023, after the firm debuted its first systematic ETF product in 2015. The introduction of ROIS, VMAX and HQGO, as well as the firm’s recent investment to grow internal resources dedicated to its systematic ETFs, underscores its commitment to and focus on the space and ongoing dedication to delivering new and innovative solutions. The addition of ROIS brings the firm’s suite of systematic ETFs to nine.
Hartford Funds’ systematic strategies utilize a proprietary multifactor investment approach developed by the firm involving a focused set of factors including Size, Value, Quality and Momentum, and are intended to enhance diversification for investors. Amidst ongoing volatility and a dynamic market environment, the firm’s passively managed ETFs offer investors a broad range of options and exposure to markets through a variety of systematic strategies.
“As we embark on this journey of evolving and expanding our ETF suite, it’s imperative that our investment options help meet the diverse needs of our clients,” said Brian Kraus, Senior Vice President for Systematic ETFs at Hartford Funds. “We are excited about the growth of our flagship lineup of systematic ETF products and look forward to continuing to leverage our strong expertise with systematic ETFs to provide our clients with compelling investment opportunities.”
Hartford Multifactor International Small Company ETF [ROIS]
ROIS is a Small/Mid Cap Value ETF that seeks to improve diversification compared to traditional market-cap weighted index benchmarks, exploring exposure to return-enhancing factors such as reduced volatility, relative sector, country and size constraints and momentum. Hartford Multifactor International Small Company ETF seeks to benefit from the large and inefficient opportunity set within international small cap securities, offering investors exposure to Value, Momentum and Quality while seeking to achieve reduced volatility.
ROIS is listed on Cboe BZX Exchange, Inc. and has total operating expenses of
Hartford US Value ETF [Cboe: VMAX] and Hartford US Quality Growth ETF [Nasdaq: HQGO]
VMAX and HQGO are designed to meet strong investor demand for Systematic Large Value and Large Growth ETFs, respectively. VMAX seeks to emphasize the Value factor due to that factor’s favorable return enhancing potential, while HQGO seeks to exploit what we view as the inefficiencies of the Russell 1000 Growth Index to have better risk allocation within the Large Growth category. With ROIS, these Funds offer investors systematic and repeatable strategies amidst ongoing volatility.
VMAX is listed on Cboe BZX Exchange, Inc. and has total operating expenses of
All three ETFs are advised by Lattice Strategies LLC, a wholly owned subsidiary of Hartford Funds Investment Management, LLC. For more information about these Funds, please visit hartfordfunds.com.
About Hartford Funds
Founded in 1996, Hartford Funds is a leading asset manager, which provides mutual funds, ETFs, and 529 college savings plans. Using its human-centric investing approach, Hartford Funds creates strategies and tools designed to address the needs and wants of investors. Leveraging partnerships with leading experts, Hartford Funds delivers insight into the latest demographic trends and investor behavior.
The firm’s product line-up includes more than 60 mutual funds and ETFs in a variety of styles and asset classes. Its mutual funds (with the exception of certain funds) are sub-advised by Wellington Management or Schroder Investment Management North America Inc. The strategic beta ETFs offered by Hartford Funds are designed to help address investors’ evolving needs by leveraging a unique risk-optimized approach, which identifies risks within each asset class and then deliberately and systematically re-allocates capital toward risks more likely to enhance return potential. Excluding affiliated funds of funds, as of December 31, 2023, Hartford Funds’ investment advisory business had approximately
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Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in The Hartford’s Quarterly Reports on Form 10-Q, our 2023 Annual Report on Form 10-K and the other filings The
From time to time, The
Important Risks for Hartford Multifactor International Small Company ETF: The Fund is new and has a limited operating history. Investing involves risk, including the possible loss of principal. The net asset value (NAV) of the Fund's shares may fluctuate due to changes in the market value of the Fund's holdings. The Fund's share price may fluctuate due to changes in the relative supply of and demand for the shares on an exchange. Security prices fluctuate in value depending on general market and economic conditions and the prospects of individual companies. ● The Fund is not actively managed but rather attempts to track the performance of an index. The Fund's returns may diverge from that of the index. ● Foreign investments may be more volatile and less liquid than
Important Risks for Hartford US Value ETF: The Fund is new and has a limited operating history. Investing involves risk, including the possible loss of principal. The net asset value (NAV) of the Fund's shares may fluctuate due to changes in the market value of the Fund's holdings. The Fund's share price may fluctuate due to changes in the relative supply of and demand for the shares on an exchange. Security prices fluctuate in value depending on general market and economic conditions and the prospects of individual companies. ● The Fund is not actively managed but rather attempts to track the performance of an index. The Fund's returns may diverge from that of the index. ● Investments focused in an industry or group of industries may increase volatility and risk. ● Different investment styles may go in and out of favor, which may cause the Fund to underperform the broader stock market.
Important Risks for Hartford US Quality Growth ETF: The Fund is new and has a limited operating history. Investing involves risk, including the possible loss of principal. The net asset value (NAV) of the Fund's shares may fluctuate due to changes in the market value of the Fund's holdings. The Fund's share price may fluctuate due to changes in the relative supply of and demand for the shares on an exchange. Security prices fluctuate in value depending on general market and economic conditions and the prospects of individual companies. ● The Fund is not actively managed but rather attempts to track the performance of an index. The Fund's returns may diverge from that of the index. ● Investments focused in an industry or group of industries may increase volatility and risk. ● Different investment styles may go in and out of favor, which may cause the Fund to underperform the broader stock market.
Diversification does not ensure a profit or protect against a loss in a declining market.
* Expenses are the total annual fund operating expenses as shown in the most recent prospectus.
Investors should carefully consider a fund’s investment objectives, risks, charges and expenses. This and other important information is contained in the fund’s full prospectus and summary prospectus, which can be obtained by visiting hartfordfunds.com. Please read it carefully before investing.
Mutual funds are distributed by Hartford Funds Distributors, LLC (HFD), Member FINRA. ETFs are distributed by ALPS Distributors, Inc. (ALPS). Advisory services may be provided by Hartford Funds Management Company, LLC (HFMC) or its wholly owned subsidiary, Lattice Strategies LLC (Lattice). Certain funds are sub-advised by Wellington Management Company LLP and/or Schroder Investment Management North America Inc (SIMNA). Schroder Investment Management North America Ltd. (SIMNA Ltd) serves as a secondary sub-adviser to certain funds. HFMC, Lattice, Wellington Management, SIMNA, and SIMNA Ltd. are all SEC registered investment advisers. Hartford Funds refers to HFD, HFMC, and Lattice, which are not affiliated with any sub-adviser or ALPS.
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Media:
Abby Hickey
339.933.2174
ahickey@prosek.com
Source: Hartford Funds
FAQ
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