After a painful transition away from the lower-for-longer environment, fixed income appears to have regained its footing. Bonds look attractive from both a diversification and income perspective in our view, with yields at multi-year highs across all sectors. So far, so good, but the recent US regional bank crisis is the latest in a series of events that remind us that bond investors face a new, more volatile normal.
This new macroeconomic regime may likely present shorter and more pronounced cycles and a greater occurrence of idiosyncratic risk―whether from country, sector, or individual issuer. In this environment, we think combining the flexibility offered by active management with greater diversification based on fundamental research will be key to future success. An important consideration in this context is the role of geographical diversification.
Important Risks: Investing involves risk, including the possible loss of principal. Security prices fluctuate in value depending on general market and economic conditions and the prospects of individual companies. The Fund may allocate a portion of its assets to specialist portfolio managers, which may not work as intended. • Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. • Foreign investments, including foreign government debt, may be more volatile and less liquid than US investments and are subject to the risk of currency fluctuations and adverse political, economic and regulatory developments. These risks may be greater, and include additional risks, for investments in emerging markets or if the Fund focuses in a particular geographic region or country. Diversification does not ensure a profit or protect against loss.
The views expressed herein are those of Wellington Management, are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. The views expressed may not reflect the opinions of Hartford Funds or any other sub-adviser to our funds. They should not be construed as research or investment advice nor should they be considered an offer or solicitation to buy or sell any security. This information is current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management or Hartford Funds.
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