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Hartford Schroders International Multi-Cap Value Fund

August 2018 Monthly Update

Performance (%)
% (as of 9/30/2018)
Average Annual Total Returns % (as of 9/30/2018)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I -3.24 0.19 9.70 4.45 7.17 5.07
Benchmark -3.09 1.76 9.97 4.12 5.18 ---
Morningstar Foreign Large Value Category -3.44 -0.17 7.75 3.22 4.21 ---
Performance (%)
% (as of 9/30/2018)
Average Annual Total Returns % (as of 9/30/2018)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I -3.24 0.19 9.70 4.45 7.17 5.07
Benchmark -3.09 1.76 9.97 4.12 5.18 ---
Morningstar Foreign Large Value Category -3.44 -0.17 7.75 3.22 4.21 ---
SI = Since Inception. Fund Inception: 08/30/2006
Operating Expenses:   Net 0.87% |  Gross  0.87%

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

International equity markets, as represented by the MSCI ACWI ex USA Index, posted a negative return in August amid persistent US-China trade tensions, Turkey’s currency crisis, and uncertainty over whether Italy’s 2019 budget proposal will comply with European Union (EU) fiscal rules. As a result, more defensive areas of the market, such as healthcare in Europe and Japan and consumer staples in Europe, showed relative outperformance.  

Value, as represented by the MSCI ACWI ex USA Value Index1, returned -3.09% for the month, underperforming both the broader index, the MSCI ACWI ex USA Index, and its growth counterpart, represented by the MSCI ACWI ex USA Growth Index2, which returned -2.09% and -1.13% respectively.  

Against this backdrop, the Fund (Class I Shares) returned -2.70% in August, underperforming its benchmark, the MSCI ACWI ex USA Index, while outperforming the MSCI ACWI ex USA Value Index.

Materials were a negative contributor as our holdings within mining companies dragged on performance after many metals softened over the month. Industrials was also a negative contributor to performance as our deeper value holdings underperformed while the market focused on more defensive areas of the market.

The main contributors came from developed and emerging Asian telecommunication services as broad-based stock selection drove performance. Energy stocks were also a significant positive contributor over the month as the oil price outperformed the broader market. Our stock selection within the sector was rewarded over the month.       

 

Portfolio Positioning

We continue to see opportunities across the full spectrum, from deep value in resources and Japan to high-quality yield in consumer staples and healthcare companies.

The most significant exposure remains financials. We continue to be focused on attractively valued stocks while also being conscious of the quality of the company to assess its risk.  Deep value remains within some European and Asian banks.

The recent strong performance of more defensive areas of the market led us to take profits from a number of our positions in healthcare and telecommunication services, primarily among European and Japanese companies, as these stocks performed strongly over the month.

Resources continue to be a significant holding in our portfolios. Our preferred holdings have been focused on chemicals, mining, and integrated oil & gas, which offer an attractive valuation given their quality attributes. Over the month, weakness in a number of our preferred holdings in materials led to us adding to our allocation.

In more cyclical areas we continue to find opportunities across a number of areas. We continue to be underweight technology, which comes from our lack of exposure to more expensive and very fashionable technology companies, as well as lower-quality, larger auto manufacturers. The weakness in consumer discretionary companies led us to increase our exposure as valuations become more attractive.

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Quarterly Fund Outlook & Commentary
Investment Strategist Jonathan Mackay

MSCI ACWI ex USA Value Index captures large and mid cap securities exhibiting overall value style characteristics across developed markets countries and emerging markets countries.

2 MSCI ACWI ex USA Growth Index captures large and mid cap securities exhibiting overall growth style characteristics across developed markets countries and emerging markets countries.

Indices are unmanaged and not available for direct investment.

Important Risks: Investing involves risk, including the possible loss of principal. The Fund seeks to achieve its investment objective by allocating assets among different asset classes. There is no guarantee a fund will achieve its stated objective. Security prices fluctuate in value depending on general market and economic conditions and the prospects of individual companies. ● 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 and economic developments. These risks may be greater for investments in emerging markets. ● Small- and mid-cap securities can have greater risks and volatility than large-cap securities. ● Different investment styles may go in and out favor, which may cause a 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 focus on investments in particular geographic regions or countries, so it may be more exposed to risks and volatility than a more broadly diversified 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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