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Hartford Schroders International Multi-Cap Value Fund

November 2017 Monthly Update

Performance (%)
% (as of 12/31/2017)
Average Annual Total Returns % (as of 12/31/2017)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 23.29 23.29 8.49 7.75 4.09 5.72
BENCHMARK 27.19 27.19 7.83 6.80 1.84 ---
Morningstar Foreign Large Value Category 22.37 22.37 6.85 6.74 1.21 ---
Performance (%)
% (as of 12/31/2017)
Average Annual Total Returns % (as of 12/31/2017)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 23.29 23.29 8.49 7.75 4.09 5.72
BENCHMARK 27.19 27.19 7.83 6.80 1.84 ---
Morningstar Foreign Large Value Category 22.37 22.37 6.85 6.74 1.21 ---
SI = Since Inception. Fund Inception: 08/30/2006
Operating Expenses:   Net 0.89% |  Gross  0.89%

Performance prior to 10/24/16 for Class I-shares reflects the performance, fees, and expenses of the Investor Class of the predecessor fund Schroder International Multi-Cap Value Fund. If Class I fees and expenses were reflected, performance would have differed. SI performance is calculated from 8/30/06.

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.

 

Performance Review

The Fund (Class I Shares) returned 0.69% for the month of November, underperforming its benchmark, the MSCI ACWI ex USA Index, which returned 0.81%. While the year-long trend of growth stocks outperforming higher-quality names waned somewhat during the month, positioning in high-growth regions, such as emerging Asia, proved a drag on performance, driven largely by not holding expensive growth names, such as Tencent.

The Fund’s portfolio, however, did benefit from the reversal away from high momentum stocks toward the end of the month. Stock selection in Continental Europe was the main contributor to performance. On a sector basis, the telecoms sector was the standout performer, with consumer discretionary, materials, and financials also adding value.

Within telecoms, our overweight positioning in Japan was the main driver of performance. Overweight positions in Europe also added value.

Within Continental Europe, a mix of both defensive and cyclical sectors added value. Consumer discretionary was the strongest in the region, driven by a combination of underweights in luxury goods manufacturers and holdings in the media and auto parts industries. Selective holdings in banks and underweight exposure to healthcare also added value.     

 

Portfolio Positioning

Our most significant exposure remains financials, and we have added to this further over the month. The exposure to financials is still focused primarily on attractively valued stocks, while also keeping in mind our view on the quality of the company in assessing its risk. Deep value remains within some European and Asian banks, and we have recently added to exposure in Europe.

At an aggregate level, we are underweight the defensive sectors, driven by our underweight in expensive consumer staples names within food & drink and home products in Europe. The telecoms sector is our most significant exposure in this group of sectors, and our focus remains on integrated providers where we are overweight across regions.

In more cyclical areas, we continue to find opportunities in a number of auto parts companies, which we view as being more stable than larger auto manufactures, but still reasonably valued. In addition, media and advertising companies have seen some relative weakness, and we have been gaining exposure to the higher-quality names.    

 

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Quarterly Fund Outlook & Commentary
Client Portfolio Manager Derek Power

Important Risks: All investments are subject to risk, including the possible loss of principal. There is no guarantee the Fund will achieve its stated objective. The Fund’s share price may fluctuate due to market risk and/or security selections that may underperform the market or relevant benchmarks. If the Fund’s strategy for allocating assets among different asset classes does not work as intended, the Fund may not achieve its objective or may underperform other funds with similar investment strategies. Foreign investments can be riskier and more volatile than U.S. investments due to the adverse effects of currency exchange rates, differences in market structure and liquidity, as well as political and economic developments in foreign countries and regions (e.g., “Brexit”). These risks are generally greater for investments in emerging markets. Small- and mid-cap securities can have greater risk and volatility than large-cap securities. Value investing may go out of favor, which may cause the Fund to underperform the broader stock market. The main risk of real estate related securities is that the value of the underlying real estate may decrease in value. The Fund may have high portfolio turnover, which could increase the Fund’s transaction costs and an investor’s tax liability. The Fund may be adversely affected when certain large shareholders purchase or redeem large amounts of shares of the Fund.

The views expressed herein are those of Schroder Investment Management North America Inc. (Schroders) are for informational purposes only, and are subject to change based on prevailing market, economic, and other conditions. They may not reflect the views of Hartford Funds or any other sub-adviser to our funds and should not be construed as research or investment advice or as an offer or solicitation to buy or sell any security.

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