Short Duration: A Timely Strategy for a Shifting Market?

Second Quarter 2026 | By Marc Piccuirro Fixed Income Volatility Market Perspectives

Hartford Short Duration Fund may offer a compelling blend of income, flexibility, and resilience in today’s shifting rate environment.

What You Need To Know

Though the Federal Reserve’s path forward on rate policy is uncertain, the current environment may still favor fixed income.
We believe the current environment favors short-duration strategies,¹ especially in a scenario in which short-term rates rally while longer-term rates remain unchanged or move higher.
Hartford Short Duration Fund may be well-positioned to help investors who are seeking a compelling way to pursue income and total return in a quickly shifting market.

Market Outlook

With inflation pressures reemerging due to the conflict between the US and Iran, the Federal Reserve’s (Fed) rate policy is increasingly uncertain going forward. However, today’s setup offers a rare mix: elevated long rates and meaningful rolldown potential (the potential price gain from a bond’s price moving toward its face value as it approaches maturity). Meanwhile, the fiscal backdrop may be transitioning from a period of uncertainty to one that supports growth.

Fixed Income

Not All Credit Is Created Equal: Why Selectivity Matters

Shifting valuations, policy dynamics, and dispersion across sectors are reshaping where fixed-income opportunities may lie.

Why Short Duration Now?

We see multiple plausible yield-curve paths from here. A bull steepener (when short-term rates fall faster than long-term rates) could emerge if inflation cools and the Fed resumes easing, but a bear steepener (long-term rates rise faster than short-term rates) is also possible if inflation risk and term premium² keep longer-term yields elevated even as the Fed remains cautious. We believe this environment is particularly favorable for short-duration strategies, especially since markets are in transition and volatility is likely. We see two potential paths:

Scenario 1: If higher inflation proves short term, the front end of the curve may rally, boosting price appreciation and enhancing total returns. Investors can benefit by continuing to earn income as yields move lower.
Scenario 2: Inflation remains sticky and energy-driven price pressures persist. In this case, short duration may still offer compelling income while limiting exposure to longer-maturity risk.

What Sets the Hartford Short Duration Fund Apart?

Both scenarios could be constructive for the Hartford Short Duration Fund. With a current SEC yield³ of 4.57% (I share as of 3/31/26), an average duration of 2.11 years, and the potential for capital appreciation, we believe the Fund is well-positioned for shifting markets.

The Hartford Short Duration Fund seeks to help investors capture income in a variety of market environments while managing interest-rate sensitivity by seeking to offer:

Fixed Income

Not All Credit Is Created Equal: Why Selectivity Matters

Shifting valuations, policy dynamics, and dispersion across sectors are reshaping where fixed-income opportunities may lie.

Diversified exposure: The Fund makes use of a broad opportunity set, including Treasuries, agency mortgages, investment-grade corporates, and securitized credit (non-agency residential mortgage-backed securities, commercial mortgage-backed securities, and asset-backed securities), as well as high-yield bonds and bank loans for additional income potential.
Active management: The Fund can actively rotate through these sectors based on relative value to select potentially attractive individual bonds as opportunities arise.
A focus on quality credit: Primarily invested in investment-grade holdings, the Fund’s team fundamentally believes that income is the most consistent form of return. As such, the Fund seeks differentiated sources of income that help provide diversification to help buffer market volatility.

Hartford Short Duration Has Offered Strong Returns With Less Volatility
Three-year Annualized Returns vs. Volatility

Chart Data: 4/1/23-3/31/26. Past performance does not guarantee future results. Indices are unmanaged and not available for direct investmentBased on Bloomberg sector indices vs. the Hartford Short Duration Fund I. Standard deviation measures the spread of the data about the mean value and is a measure of the portfolio’s total-return volatility over the last three years. A higher standard deviation indicates greater historical volatility. See last page for representative indices. Data Source: Morningstar, 5/26.

Final Thoughts

With elevated starting yields, a supportive rate environment, and a strategy designed for flexibility, the Hartford Short Duration Fund may offer a compelling way for investors to pursue income and total return. Backed by Wellington’s collaborative investment model and dedicated sector expertise, the strategy may be helpful today as investors try to position themselves for attractive returns despite a dynamic market environment.

PERFORMANCE %

Hartford Short Duration I	0.19	1.18	1.31	4.08	6.12	3.06	2.99	2.93
	CUMULATIVE % (as of 6/30/2026)			AVERAGE ANNUAL TOTAL RETURNS % (as of 6/30/2026)
	1 MONTH	QTD	YTD	1YR	3YR	5YR	10YR	SI
Benchmark	0.08	0.48	0.76	3.14	4.64	2.12	2.00	---
Morningstar Short-Term Bond Category	0.13	---	1.05	3.70	5.35	2.42	2.42	---

Hartford Short Duration I	0.19	1.18	1.31	4.08	6.12	3.06	2.99	2.93
	CUMULATIVE % (as of 6/30/2026)			AVERAGE ANNUAL TOTAL RETURNS % (as of 6/30/2026)
	1 MONTH	QTD	YTD	1YR	3YR	5YR	10YR	SI
Benchmark	0.08	0.48	0.76	3.14	4.64	2.12	2.00	---
Morningstar Short-Term Bond Category	0.13	---	1.05	3.70	5.35	2.42	2.42	---

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: 10/31/2002

Share Class Inception: 2/26/10.
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 10/31/02.

Operating Expenses: Net 0.50% | Gross 0.51%

30-Day SEC Yield (Class I) 4.57% Unsubsidized 30-Day SEC Yield (Class I) 4.57%

To learn more about the Hartford Short Duration Fund, please talk to your financial professional.

¹ Duration is a measure of the sensitivity of an investment’s price to nominal interest-rate movement.²Term premia is the compensation that investors require for bearing the risk of longer maturities, which are more sensitive to changes in interest rates. ³SEC yield reflects the hypothetical net current income earned, after the deduction of a fund’s expenses, during a 30-day period, expressed as an annual percentage rate based on the fund’s share price at the end of the period.

Asset-Backed Securities are represented by the Bloomberg US ABS Index, a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.

Bloomberg US Aggregate Bond Index is composed of securities from the Bloomberg Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index, and Commercial Mortgage-Backed Securities Index.
Commercial Mortgage-Backed Securities are represented by the Bloomberg Global Aggregate US CMBS Index, a component of the Bloomberg U.S. Aggregate Bond Index that includes commercial mortgage-backed securities.
Corporate Bonds are represented by the Bloomberg US Corporate Bond Index, which covers all publicly issued, fixed rate, nonconvertible, investment grade debt.
Intermediate Bonds are represented by the Bloomberg US Aggregate Intermediate Index, an unmanaged index reflecting performance of the intermediate-term government bond market.
Mortgage-Backed Securities are represented by the Bloomberg US Agency Fixed Rate MBS Index, which measures the performance of investment grade fixed-rate mortgage-backed pass-through securities of GNMA, FNMA, and FHLMC.
Municipal Bonds are represented by the Bloomberg Municipal Index, which is designed to cover the USD-denominated long-term tax exempt bond market.

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. • Fixed income security risks include credit, liquidity, call, duration, event and interest-rate risk. As interest rates rise, bond prices generally fall. • Loans can be difficult to value and less liquid than other types of debt instruments; they are also subject to nonpayment, collateral, bankruptcy, default, extension, prepayment and insolvency risks. • The risks associated with mortgage-related and asset-backed securities as well as collateralized loan obligations (CLOs) include credit, interest-rate, prepayment, liquidity, default and extension risk. • Investments in high-yield (“junk”) bonds are considered speculative, involve heightened credit risk and greater risk of price volatility, illiquidity, and default than investment grade bonds. • Derivatives are generally more volatile and sensitive to changes in market or economic conditions than other securities; their risks include currency, leverage, liquidity, index, pricing, valuation, and counterparty risk. • Foreign investments may be more volatile and less liquid than U.S. investments and are subject to the risk of currency fluctuations and adverse political, economic and regulatory developments. • Restricted securities may be more difficult to sell and price than other securities. • Obligations of U.S. Government agencies are supported by varying degrees of credit but are generally not backed by the full faith and credit of the U.S. Government. • The portfolio managers may allocate a portion of the Fund’s assets to specialist portfolio managers, which may not work as intended.Diversification does not ensure a profit or protect against a loss in a declining market.

Diversification does not ensure a profit or protect against a loss in a declining market.

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Insight from sub-adviser Wellington Management

Marc Piccuirro, CFA

Portfolio Manager for Hartford Short Duration Fund and Senior Managing Director