Hartford Funds unveils US quality-value ETF

Oct 18th, 2023 | By | Category: Equities

Hartford Funds has completed its first conversion of a mutual fund to a fully transparent, actively managed ETF.

Hartford Funds unveils US quality-value ETF

Hartford has joined the growing trend of converting mutual funds into ETFs.

The $170 million Hartford Quality Value ETF (QUVU US) sustains the same investment philosophy, management process, and portfolio team as its predecessor, the Hartford Quality Value Fund, which first debuted in 1996.

Tom McConnell, Head of Product Innovation and Implementation at Hartford Funds, commented: “As we continue to innovate our line-up, our intent is to make it as compelling as possible. Converting strategies to benefit from the efficiencies inherent in the ETF structure is part of that process. We believe that QUVU presents an attractive value investment strategy for the marketplace.”

Hartford offers more than 50 mutual funds collectively housing over $130 billion in assets, highlighting the potential for further mutual fund-to-ETF conversions in the future.

Investment strategy

QUVU is sub-advised by Boston-based Wellington Management, an independent investment manager overseeing more than $1 trillion in assets. Wellington has been a sub-adviser to Hartford Funds for over a quarter of a century.

The ETF’s portfolio management team consists of Matthew G. Baker, Nataliya Kofman, and Brian J. Schmeer, who collectively bring 64 years of industry experience, 43 of those years being at Wellington.

QUVU is designed as a traditional large-cap value fund that prioritizes investment in high-quality, undervalued companies from industries that are currently out of favor but are believed to have less downside risk compared to the broader market.

Wellington employs extensive fundamental research to identify firms that are committed to dividends and are showing sustainable or improving operating metrics. Environmental, Social, and Governance (ESG) criteria are also incorporated into the fundamental analysis to offer a well-rounded view of each company’s risk and return potential.

While the ETF’s portfolio could encompass a broad range of market capitalizations, it generally leans toward large-cap companies, resembling those found in the Russell 1000 Value Index.

The portfolio is structured to offer diversification across both companies and industries. As of October 16, the leading sector exposures were Financials (19%), Health Care (17%), Information Technology (11%), Industrials (10%), Consumer Staples (9%), and Energy (9%). From a total of 69 holdings, the most significant single stock position was TotalEnergies SE ADR at just 2.4%.

The ETF is listed on Cboe BZX Exchange with an expense ratio of 0.45%.

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