Hartford Quality Value ETF's Average People Pillar and Process Pillar ratings result in a Morningstar Medalist Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy’s management team earns an Average People Pillar rating. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a substantial underweight position in volatility exposure and has an overweight in liquidity exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a high liquidity exposure is rooted in stocks with higher trading volumes, lending managers more flexibility. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar 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

JPMorgan Chase & Co

Wells Fargo

Merck

American Express

Philip Morris

EOG Resources

Medtronic

QUALCOMM

Morgan Stanley

Pfizer

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Hartford Quality Value ETF earns an Average Process Pillar rating. 

The leading factor in the rating is the firm's five-year retention rate of 82% over the period. The stability of the management team also contributes to the process. Specifically, the fund has not seen a manager change in the last seven years. Lastly, the process is limited by the parent firm's five-year risk-adjusted success ratio of 49%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup.

 This strategy, over time, has preferred smaller market-cap companies, compared with others in the Large Value Morningstar Category.  But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Looking at additional factor exposure, the managers have consistently had exposure to low-volatility stocks over the past few years, or those whose relative returns look best when the markets are their worst. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. In the latest month, the strategy was also less exposed to the Volatility factor compared with Morningstar Category peers. Given the high trading volume of holdings, this strategy has been exposed to liquid assets during these years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. Compared with category peers, however, the strategy had less Liquidity factor exposure in the latest month. In addition, this strategy has not maintained a defensive tilt, demonstrated by low exposure to the quality factor. This means the fund avoids holding firms that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. In recent months, the strategy also had less Quality factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio has allocations in its top two sectors, financial services and communication services, that are similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and technology, with consumer cyclical underweighting the average portfolio by 2.9 percentage points of assets and technology similar to the average. The strategy owns 68 securities and is less top-heavy than peers. Specifically, 24.3% of the strategy's assets are concentrated within the top 10 fund holdings, compared to the category’s 27.4% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 30% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Hartford Quality Value ETF earns an Average People Pillar rating. Nataliya Kofman, the longest-tenured manager on the strategy, boasts 15 years of listed portfolio management experience. The average Morningstar Rating of the strategies they manage is 4.3 stars, demonstrating stellar risk-adjusted performance. Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of 12 years of listed portfolio management experience. As a team, they manage five investment vehicles together, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha in aggregate. The management team is invested in the fund, but the maximum investment by any manager is between $100,000 and $500,000. An investment of more than $1 million would be ideal to align managers' interests with those of the fund's investors. 

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

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.

Above Average

Parent

Hartford Quality Value ETF

QUVU is actively managed, seeking long-term capital appreciation by investing in large-cap US stocks perceived to be trading at a discount to their intrinsic value.

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It would have been a pretty quiet week in terms of new ETFs, except for Thursday, October 19. That was the day that saw 19 fund launches, possibly the most ETF rollouts in one day that the industry has ever seen.

This Week in ETFs: One Very Busy Day Sees 19 New Funds

Hartford Total Return Bond ETF

Hartford Multifactor Developed Markets (ex-US) ETF

Hartford Multifactor US Equity ETF

Hartford Funds has added the first active equity ETF to its lineup through the conversion of an existing mutual fund with a 27-year track record. The Hartford Quality Value ETF (QUVU) is subadvised by Wellington Management.

Hartford Funds Launches Active Equity ETF via Mutual Fund Conversion

WAYNE, Pa.--(BUSINESS WIRE)--Hartford Funds, a leading global asset manager, announced today the expansion of its exchange-traded funds (ETFs) offerings with the launch of Hartford Quality Value ETF (Ticker symbol: QUVU). QUVU is the result of Hartford Funds' first mutual fund to ETF conversion and will be an actively managed fully transparent equity ETF.

Hartford Funds Launches Hartford Quality Value ETF, After Completing Mutual Fund-to-ETF Conversion

News for Hartford Quality Value ETF ETF (QUVU)