A strong management team and sound investment process underpin Hartford Sustainable Income ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy’s management team earns a High People Pillar rating. The strategy merits an Above Average Process Pillar rating.  The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People, Process and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Aptiv

Becton, Dickinson and Co.

A sensible, repeatable, and value-driven approach, supported by deep research and risk-management tools, supports an Above Average Process rating.

Comanagers Campe Goodman, Robert Burn, and Joseph Marvin set out to bring together Wellington's best ideas in credit in this portfolio. In doing so, they aim to outperform a custom benchmark that comprises one third each of the Bloomberg Intermediate US Treasury, Bloomberg Emerging Markets USD Sovereign BBB+ and Lower, and Bloomberg High Yield 2% Issuer Capped indexes. The managers determine the strategy's top-down positioning for overall risk levels, sector allocations, and duration by integrating research from across the firm's well-resourced fixed-income platform. Once these parameters are set, sector specialists backed by large analyst teams recommend securities. Alongside their embedded risk and analytics analyst, the comanagers use an impressive internal risk-management system to monitor the portfolio.

The strategy balances hefty stakes in high-yield bonds, emerging-markets debt, and bank loans with a moderate mix of investment-grade corporates, U.S. Treasuries, and agency and nonagency mortgages. Its Wellington subadvisor won't load up on the dodgiest fare and tactically increases exposure to below B rated credits only when the team sees attractive valuations.
The strategy will often keep a longer duration, which can deviate from that of the Bloomberg US Aggregate Bond Index by up to 2.5 years, versus category peers to balance some of the credit risk it takes on, and the team employs credit and interest-rate derivatives to take long and short exposures to various sectors.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point) Morningstar maps the covered vehicle’s Process Pillar to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning Process Pillar ratings to vehicles that follow the same strategy.

Above Average

Process

Increased confidence in the strategy’s leadership and supporting resources justifies a People rating upgrade to High from Above Average.

In early 2023, longtime comanager and sector rotation specialist Rob Burn was named a Wellington Management Company Partner, signaling that he and his fellow partner comanagers will manage this strategy together for many years to come. Lead manager Campe Goodman and comanagers Rob Burn and Joe Marvan have run this strategy since 2012. Goodman, who heads the sector-rotation team, has been at the firm since 2000. Marvan heads the fixed-income group's broad market team; Burn, who has a strong quant background, joined the firm in 2007 and this effort in mid-2016.

The trio makes top-down decisions, while sector specialists tackle security selection within the portfolio sleeves. Wellington veterans Chris Jones and Michael Hong are responsible for the global high-yield subportfolio, for example, while Jeff Heuer covers the bank-loan sector. Jones, a nearly 30-year Wellington veteran, will retire at the end of June 2023, but Wellington partner Mike Barry has long been his heir apparent and is a capable replacement. At the start of 2022, emerging-market debt veteran Kevin Murphy took over leadership of Wellington’s long-only Emerging Markets Debt platform from Wellington veteran Jim Valone, who retired at the end of 2021. Management sources emerging-markets debt ideas across several experienced sector specialists, so there was minimal disruption here. 

The team is backed by a deep and experienced analyst bench that includes sizable investment-grade and high-yield credit research groups, and emerging-markets and quant specialists. The firm’s risk and analytical tools have significantly improved in recent years and stand out from peers.

Note: The People Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point), Morningstar maps the covered vehicle’s People Pillar ratings to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning People Pillar ratings to vehicles that follow the same strategy.

High

People

Hartford Funds’ investors benefit from access to strong subadvisors at a reasonable cost. The firm earns an Above Average Parent Pillar rating.

Hartford’s industry relationships are key to its success. It maintains a long-standing partnership with standout investment manager Wellington Management Company, which has run the firm's equity and fixed-income funds since 1996 and 2012, respectively. Wellington now subadvises more than half of Hartford’s $124.1 billion in fund assets. In 2016, Hartford launched strategic-beta exchange-traded funds with its acquisition of Lattice Strategies and partnered with Schroders to expand its investment platform’s offerings, especially in non-U.S. strategies.

Hartford leaves most investment decisions to its subadvisors but collaborates with them on product development, risk oversight, and distribution. The firm reorganized its sales efforts and grew its product-management capabilities in 2013. Firm leadership has since added further resources to its distribution and oversight teams, while merging and liquidating subpar offerings, and has introduced new strategies. 

Hartford has sought to provide more-competitive fees. The firm has launched share classes without embedded distribution charges and reduced fees on other share classes. Still, as most shares remain in average or costlier fee groups, there is room for improvement.

Parent

Hartford Sustainable Income ETF

HSUN is actively managed to provide broad exposure to debt securities that meet certain sustainable investing criteria with attractive yields.

The issuer rolled out an actively managed bond ETF that comes with ESG screens.

Hartford Funds Adds Sustainable Bond ETF

On Wednesday, Hartford Funds announced the launch of an actively managed, ESG-focused fixed income exchange-traded fund (“ETF”), the Hartford Sustainable Income ETF (CBOE: HSUN), which will be sub-advised by Wellington Management Company LLP. HSUN seeks to provide current income and long-term total return within a sustainability framework.

Hartford Funds Launches Sustainable Investing-Focused ETF, HSUN

WAYNE, Pa.--(BUSINESS WIRE)--Hartford Funds today announced the launch of an actively managed, ESG-focused fixed income exchange-traded fund (“ETF”), Hartford Sustainable Income ETF (CBOE: HSUN), which will be sub-advised by Wellington Management Company LLP. HSUN seeks to provide current income and long-term total return, within a sustainability framework. HSUN will invest across an array of fixed income sectors including Investment Grade, High Yield, Bank Loans, and Emerging Market Debt. In a

News for Hartford Sustainable Income ETF ETF (HSUN)