Hartford Funds launches Schroders tax-aware bond ETF

Apr 20th, 2018 | By | Category: Fixed Income

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Hartford Funds has launched the Hartford Schroders Tax-Aware Bond ETF (HTAB US) on NYSE Arca. Sub-advised by Schroder Investment Management North America, the actively managed ETF targets strong after-tax returns by investing in a diversified portfolio of taxable and tax-exempt bonds.

Hartford Funds launches Schroders tax-aware bond ETF

Vernon Meyer, chief investment officer of Hartford Funds.

“Investors are seeking high quality fixed income solutions providing compelling after-tax returns at a competitive price,” said Vernon Meyer, chief investment officer of Hartford Funds.

“Further expanding our fixed income offerings allows us to match our strong mutual fund track record in tax-aware and municipal bond strategies with a similar investment approach in our growing ETF business.”

To be eligible for inclusion in the fund, bonds must be rated investment grade and denominated in US dollars. The prospectus does not specify any maturity limits on eligible bonds.

HTAB seeks to add value by capitalizing on imbalances in the relationships among sectors and individual bonds, spanning both tax-exempt municipals and taxable bonds. In order to maximize after-tax value, the fund may target taxable bonds with attractive after-tax valuations. The strategy is also likely to avoid holding bonds that may result in short-term capital gains.

While the ETF may invest in taxable bonds, at least half the fund’s assets must be in tax-exempt securities at the end of each quarter in order to pay tax-exempt dividends to shareholders.

According to Hartford Funds, the strategy will monitor the possibility of rising interest rates and, where applicable, shift between sectors or adjust duration through derivatives to manage interest rate risk.

The fund has an expense ratio of 0.39%.

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