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Hartford Schroders International Multi-Cap Value Fund

January 2019 Monthly Update

Performance (%)
% (as of 1/31/2019)
Average Annual Total Returns % (as of 1/31/2019)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 8.89 -12.33 9.09 3.11 10.70 4.51
Benchmark 7.56 -12.58 9.59 3.11 8.35 ---
Morningstar Foreign Large Value Category 7.46 -13.07 6.73 1.64 7.18 ---
Performance (%)
% (as of 12/31/2018)
Average Annual Total Returns % (as of 12/31/2018)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I -15.41 -15.41 4.30 0.72 8.55 3.82
Benchmark -14.20 -14.20 4.48 0.68 6.57 ---
Morningstar Foreign Large Value Category -15.38 -15.38 2.20 -0.63 5.19 ---
SI = Since Inception. Fund Inception: 08/30/2006
Operating Expenses:   Net 0.87% |  Gross  0.87%
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

After a difficult end to 2018, international equity markets reversed in January, resulting in the market being up 7.56%, as represented by the MSCI ACWI ex USA Index. Investors moved back into areas of the market that had lagged during the sell-off at the end of the year. This reversal saw more defensive areas of the market lagging while more traditional cyclicals showing relative outperformance.

Against this backdrop, the Fund (Class I Shares) returned 8.89%, outperforming its benchmark, the MSCI ACWI ex USA Index.

The main contributors come from a wide variety of holdings from more cyclical and deeper value areas to cheap and higher quality defensive yielders. Within materials, our positioning within mining was a positive contributor over the month as many of our holdings performed strongly. Our overweight positions within United Kingdom (UK) financial names performed strongly as fears of a no-deal Brexit receded, benefiting many of our holdings.

Within more defensive areas of the market, our focuses on valuations first and then understanding the quality was rewarded. This was seen in larger-cap, more expensive names in Europe, many of which we are underweight. These stocks had been rewarded in 2018, which led us to reduce our exposure. In the January rebound, they saw relative underperformance. In addition, our preference for cheaper names in Japan and mid-caps in Europe, in both consumer staples and healthcare, benefited the Fund.    

 

Portfolio Positioning

Our process focuses on finding stocks that offer the right combination of affordability and business health (as we’ve mentioned before, value doesn’t need to simply be high risk) and we continue to see many areas of the international markets being overlooked. This means we are seeing opportunities across the full spectrum of value, 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 company’s quality to assess its risk. We took profits and reduced our exposures on a few of our favored positions in Europe that performed strongly over the month.

With the strong performance of more defensive areas of the market in December, we continued to take profits at the start of the month from a number of our positions in healthcare and staples, primarily among European companies.

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. We added to several of our preferred Asian positions.

In more cyclical areas we continue to find opportunities across a number of areas. We believe, going forward, there continue to be opportunities within these names given that they are cheap, high quality, unleveraged companies.

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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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