The Hartford Total Return Bond Fund relies on fixed-income specialists to drive returns and generate income through diverse alpha sources, all within a risk-controlled framework. The Fund focuses not just on performance, but on a principled, repeatable process that has resulted in a long-term history of outperformance.

Despite Significant Progress, Uncertainty Remains High

The outlook for global economic activity and financial markets has improved markedly as global demand has rebounded. Extraordinary accommodative monetary and fiscal policies continue to provide liquidity and support to the global economic recovery (FIGURE 1). Counterbalancing these positive developments, vaccine distribution and efficacy against new strains of COVID-19 are significant sources of uncertainty and have resulted in periods of elevated volatility.

FIGURE 1

Strong Fiscal Response to COVID-19

Estimated fiscal impulse 2020 + 2021 totals (% of GDP)

As of 3/1/21 | Actual results may differ perhaps significantly from estimates | Sources: IMF, National Finance Ministries, Wellington Management

The Hartford Total Return Bond Fund may be a prudent approach in this uncertain environment. The Fund seeks consistent excess returns through high-quality investments, managed in a risk-controlled framework. But the real differentiator is how the Fund seeks to meet this goal.

A True Team Approach

The question of “who” is a critical aspect of how the Fund seeks to achieve its goals. The Hartford Total Return Bond Fund is led by three portfolio managers from Wellington Management’s US Broad Market Team who make strategic decisions about risk posture, sector rotation, and duration. They collaborate with highly experienced sector specialists who narrowly focus on specific areas of the fixed-income market in the pursuit of outperformance (FIGURE 2).

FIGURE 2

Top-Down, Bottom-Up Expertise

The result is a bond portfolio with a low correlation to equities that invests 70%+ in core sectors (governments, investment-grade corporates, and MBS) and up to 30% in tactical investments (high yield, non-US dollar, and emerging-markets debt). The dedicated sector specialists then evaluate each component, regardless of size, based on their particular areas of expertise.

Because of this holistic approach, the Fund has made some prescient sector allocations in recent years (see Sector Specialists in Action). There is no key-man risk because there is no singular individual evaluating markets and making corresponding decisions. Instead, the investment team is led by two partners of the firm (Joseph Marvan and Campe Goodman). This structure helps ensure greater team stability and attention to succession planning.

The goal is to deliver top-quartile performance as consistently as possible, rather than top-decile performance here and there.

The team comes together, not to hit the one-off grand slam, but to try to hit singles and doubles. Their goal is to deliver top-quartile performance as consistently as possible, rather than top-decile performance sproadically, which could be a harbinger of excessive risk.

Sector Specialists in Action

The examples below illustrate some of the timely calls from the sector specialists in recent years:

Collateralized Loan Obligations (CLOs): The team was overweight select global high yield and senior tranches of CLOs for most of 2018 and into 2019. That positioning contributed to performance for much of 2018, but following the broad risk selloff in the fourth quarter, credit spreads widened in these sectors and valuations declined. Despite the short-term headwinds, our specialist teams viewed the fundamentals within these sectors as stable. As a result, Wellington’s US Broad Market Team decided to selectively add risk because they believed CLOs had become mispriced. Their conviction in the fundamental strength of both sectors contributed to our decision to overweight them relative to IG corporates late in the fourth quarter of 2018 and early in the first quarter of 2019. This provided a significant performance boost when the market rebounded sharply during the first quarter of 2019.
Energy: In 2016, the investment-grade credit team was able to add select exploration and production companies with strong liquidity and balance sheets. This helped the Fund’s energy holdings weather price volatility and default concerns following a fall in prices. These investment-grade energy holdings were a top contributor to the Fund’s performance that year.
Structured finance: Also in 2016, the US Broad Market Team increased exposure to structured finance positions, including collateralized loan obligations (CLOs), commercial MBS (CMBS), and non-agency real estate MBS (RMBS). The allocation was predicated on the thesis that these sectors were in an earlier stage of their credit cycle than corporate credit, and, in aggregate, was the largest driver of excess returns that year.
Contingent convertibles (CoCos): In 2015, macro strategists were positive on euro-area growth prospects and high-yield investors were positive on European CoCos—subordinated debt that can be converted to equity if capital ratios degrade. Fixed-income and equity analysts collaborated to identify individual European banks (among many high-quality issuers) with capital structures supportive of CoCo fundamentals. Allocation to CoCos has contributed to recent performance, particularly in 2017.
High-quality consumer credit: In 2017, the US Broad Market Team decided to allocate to residential credit by reducing investment-grade credit, anticipating that strong US fundamentals and stable monetary policy should lead to positive near-term growth. The fixed-income and equity analysts shared their preferred segments of the residential mortgage market and were able to align with the broad market team’s desired risk/return profile to identify opportunities. The subsequent allocation to RMBS was a significant positive contributor to trailing 5-year performance for the period ending 12/31/18.

FIGURE 3

Wellington Management’s Fixed-Income Asset Distribution
By major investment style (US$ bil)

An Experienced Asset and Risk Manager

Of Wellington’s more than $1.4 trillion in AUM, $527 billion are fixed-income assets (FIGURE 3).¹ The Total Return Bond team has access to both Wellington’s high-caliber, proprietary research across the Fund’s core sectors and the full body of research of the sector specialists. These specialists aren’t only compensated for making strategic allocations within their sectors, but also for being forthright about when to avoid their sectors. This approach to sector allocation is more strategic than many competitors, who focus predominantly on core sectors.

These specialists also have access to top-tier, in-house risk-management tools (FIGURE 4). These three systems test the Fund by projecting how it might react to numerous market scenarios.

The first system, the Fixed Income Portfolio Management Tool (FI-PMT), allows for multiple “what-if” pre-trade analyses. The second, Liquidity Evaluation Framework (LiEF), helps the team assess the impact of changing market conditions on the portfolios. The third, Fixed Income Risk Engine (FIRE), shows exactly where risk is within the portfolios from multiple angles, and helps estimate the potential impacts of different trades. Together, these tests account for what’s expected to happen and anything that could reasonably happen to create the strongest possible risk controls.

FIGURE 3

Wellington Management’s Fixed-Income Asset Distribution
By major investment style (US$ bil)

FIGURE 4

Risk-Management Tools

Fixed Income Portfolio Management Tool (FI-PMT)	Liquidity Evaluation Framework (LiEF^SM)	Fixed Income Risk Engine (FIRE)
Allows portfolio managers to monitor exposures by country, currency, sector, credit quality, and duration range, in real time, in both absolute and benchmark relative terms Enables "what-if" analyses to gauge impact of potential trades Linked to Wellington Management's compliance system for immediate pretrade testing of guideline compliance	Creates a point-in-time estimate of a portfolio's liquidity Based on simulations that draw on issue-specific characteristics and historic patterns of trading activity Estimates transaction costs under normal as well as "fire sale" conditions	Provides a comprehensive array of risk statistics at portfolio, sector, and individual-security levels Daily data on more than 500,000 securities Over 700 risk factors incorporated into the model, allowing a highly detailed picture of risk exposures by strategy

FIGURE 5

Credit Exposure (as of 6/30/21)

Credit exposure is the credit ratings for the underlying securities of the Fund as provided by Standard and Poor’s (S&P), Moody’s Investors Service, or Fitch and typically range from AAA/Aaa (highest) to C/D (lowest). If S&P, Moody’s, and Fitch assign different ratings, the median rating is used. If only two agencies assign ratings, the lower rating is used. Securities that are not rated by any of the three agencies are listed as “Not Rated.” Ratings do not apply to the Fund itself or to Fund shares. Ratings may change.

The end result is a fund with a bias toward high-credit quality (FIGURE 5). This could be particularly important as the bond market faces two significant threats: interest-rate volatility and inflation.

Diverse Alpha Generators

Because of their large size, some core-plus bond funds derive their risk from large interest-rate and derivative bets. Large funds can have trouble transacting in post-crisis, less liquid markets because of their large size. Other core-plus bond funds are credit funds in disguise, with significant concentration risk. An actively managed, appropriately sized fund may be able to stand up against such risk.

Cap-weighted indices often derive their returns from limited alpha sources. By contrast, Hartford Total Return Bond Fund has demonstrated a low correlation to equities and is much more flexible and dynamic than a cap-weighted index, with more diverse sources of return. And the team takes into account all market environments by diversifying sources of return across multiple perspectives, investment styles, and time horizons.

FIGURE 5

Credit Exposure (as of 6/30/21)

Credit exposure is the credit ratings for the underlying securities of the Fund as provided by Standard and Poor’s (S&P), Moody’s Investors Service, or Fitch and typically range from AAA/Aaa (highest) to C/D (lowest). If S&P, Moody’s, and Fitch assign different ratings, the median rating is used. If only two agencies assign ratings, the lower rating is used. Securities that are not rated by any of the three agencies are listed as “Not Rated.” Ratings do not apply to the Fund itself or to Fund shares. Ratings may change.

FIGURE 6

Attractive Risk-Adjusted Returns Generated by Diverse Alpha Drivers
Historical Attribution (4/01/16−6/30/21)*

^* Trailing 5-year (4/01/16-6/30/21) annualized alpha based on performance gross of fee.
Past performance does not guarantee future results. Performance Attribution Analysis was produced using FactSet Research Systems Portfolio Analysis Application, based upon Fund and benchmark holdings as of the end of each trading day, generally using Global Industry Classification Standards (“GICS”). Attribution analysis is not precise and should be considered to be an approximation of the relative contribution of returns, but may be helpful to understand contributors and detractors relative to the Fund’s benchmark.

Why Use Total Return Bond Fund in DC Plans?

Core-bond options are typically the largest fixed-income offerings in a DC plan menu. Hartford Funds believes the Hartford Total Return Bond Fund (TRB) may be an excellent choice for DC plans for these reasons:

Greater return potential — TRB has a wider opportunity set than traditional US aggregate bond fund options, which leads to the potential for higher returns.

Less exposed to rising US interest rates — The Fund has the flexibility to invest up to 20% in high yield, bank loans, and emerging-markets debt (EMD). These asset classes can help reduce exposure to US interest-rate risk relative to a traditional core bond fund.

Helps simplify DC plan menus — TRB may offer investors a simpler, more diversified way to access core-plus sectors relative to having individual fund options for plus sectors such as high yield, bank loans, and EM debt.

Diversified sources of alpha — TRB derives its alpha from multiple sectors: mortgage-backed securities (MBS), investment-grade credit, structured, global inflation, high yield, EMD, global rates, and municipals.

Experienced, multi-manager approach — One of the portfolio managers who contributes best ideas for his sector is Jim Valone, chair of Wellington’s EMD team. Jim has managed pension funds, endowments, and central banks.

Pursuit of consistent performance — The Fund strives to deliver top-quartile performance as consistently as possible, rather than sporadic top-decile performance.

State-of-the-art risk management systems —TRB relies on three separate yet complementary risk management systems to ensure risk is kept in check (FIGURE 4).

Morningstar ratings for
Mutual Fund I-Shares

Morningstar ratings for
Mutual Fund R6-Shares

Hartford Total Return Bond Fund (ITBVX)

OVERALL

(as of 5/31/2025)

Overall, 4 stars, 3-Year, 3 stars, 5-Year, 3 stars, and 10-Year, 4 stars, rated against 540, 540, 476 and 350 products, respectively. Morningstar Rating^TM is calculated for products with at least a 3-year history, based on a risk-adjusted return measure (excluding any applicable sale charges) and accounts for variations in a product's monthly performance. 5 stars are assigned to the top 10%; 4 stars to the next 22.5%, 3 stars to the next 35%, 2 stars to the next 22.5% and 1 star to the bottom 10%. ETFs and mutual funds are considered a single population. The Overall Rating is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. For more information about these ratings, including their methodology, please go to global.morningstar.com/managerdisclosures . Ratings for other share classes may vary and are subject to change monthly. Past performance is no guarantee of future performance.
©2025 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/ or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

540 Products | Intermediate Core-Plus Bond Category

Based on Risk-Adjusted Returns

Morningstar ratings for
Mutual Fund F-Shares

PERFORMANCE %

Hartford Total Return Bond I	2.15	5.41	2.18	-0.07	2.00	4.25
	CUMULATIVE % (as of 5/31/2025)		AVERAGE ANNUAL TOTAL RETURNS % (as of 5/31/2025)
	YTD	1YR	3YR	5YR	10YR	SI
Benchmark	2.45	5.46	1.49	-0.90	1.49	---
Morningstar Intermediate Core-Plus Bond Category	2.40	5.71	2.00	0.15	1.76	---

Hartford Total Return Bond I	2.66	4.95	1.14	0.91	2.01	4.29
	CUMULATIVE % (as of 3/31/2025)		AVERAGE ANNUAL TOTAL RETURNS % (as of 3/31/2025)
	YTD	1YR	3YR	5YR	10YR	SI
Benchmark	2.78	4.88	0.52	-0.40	1.46	---
Morningstar Category	2.61	5.27	0.92	0.99	1.77	---

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.

SI = Since Inception. Fund Inception: 07/22/1996

Share Class Inception: 8/31/06.
Class I-share performance prior to its inception date reflects Class A-share performance (excluding sales charges) and operating expenses. SI performance is calculated from 7/22/96.