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Hartford Schroders International Multi-Cap Value Fund

February 2019 Monthly Update

Performance (%)
% (as of 3/31/2019)
Average Annual Total Returns % (as of 3/31/2019)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 9.54 -7.10 6.65 2.14 10.81 4.50
Benchmark 10.31 -4.22 8.09 2.57 8.85 ---
Morningstar Foreign Large Value Category 8.76 -6.36 5.70 0.88 7.69 ---
Performance (%)
% (as of 3/31/2019)
Average Annual Total Returns % (as of 3/31/2019)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 9.54 -7.10 6.65 2.14 10.81 4.50
Benchmark 10.31 -4.22 8.09 2.57 8.85 ---
Morningstar Foreign Large Value Category 8.76 -6.36 5.70 0.88 7.69 ---
SI = Since Inception. Fund Inception: 08/30/2006
Operating Expenses:   Net 0.86% |  Gross  0.86%
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

We saw a steady market rise in international markets, as represented by the MSCI ACWI ex USA Index, which returned 1.95% in February, and are now up 9.66% year to date.

The rise in February hides dispersion in regional returns. Growth concerns weighed on both emerging markets (EM) and Japan, with Japanese trading houses highlighting slower demand in EM. In contrast, European markets saw stronger performance as Brexit fears declined after parliamentary votes suggested that a hard Brexit would be less likely to occur in the near future.

Sentiment was against many value names in February. As a result, we saw the MSCI ACWI ex USA Value Index1 lag its counterpart, the MSCI ACWI ex USA Growth Index,2 by 1.49%. This was in contrast to January where neither style dominated.

Against this backdrop, the Fund (Class I Shares) returned 1.34% in February, underperforming its benchmark, the MSCI ACWI ex USA Index. The main detractor came from our larger than index positions in Japan as negative sentiment weighed on the Japanese market, which ended up being one of the worst performing developed markets over the month.

The main contributors came from a variety of holdings, mainly within the UK. Our holdings from more internationally focused mining and consumer staples names to more domestically focused banks, insurers and consumer discretionary names (home builders and retailers) added value. Our holdings in semiconductors and technology, hardware in South Korea and Taiwan also contributed over the month.    

 

Portfolio Positioning

Our process focuses on finding stocks that offer the right combination of affordability and business health while we continue to see many areas of the international markets being overlooked. This means we see opportunities across the full spectrum of value, from deep value in resources and Japan, to high quality yield in consumer staples and health care 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. We increased our exposures in many of our favored positions.

Resources continue to be a significant holding in our portfolios. Our preferred holdings have been focused on chemicals, mining, and integrated oil and gas names, which offer an attractive valuation given their quality attributes. We trimmed a number of mining positions over the month given stronger performance.

In more cyclical areas of the market, we continue to find opportunities across a number of areas. We have broad opportunity from more defensive value names in Japan and Asia, to cash flow generative and less expensive names within Europe. After stronger performance in February, we took some profits in many of our names.

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1 MSCI ACWI ex USA Value Index is a free-float adjusted market-cap weighted index designed to capture large- and mid-cap securities that exhibit overall value style characteristics across developed and emerging market countries, excluding the U.S.

2 MSCI ACWI ex USA Growth Index is a free-float adjusted market-cap weighted index designed to capture large- and mid-cap securities that exhibit overall growth style characteristics across developed and emerging market countries, excluding the U.S.

Indices are unmanaged and not available for direct investment.
 

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. ● 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 or if the Fund focuses in a particular geographic region or country. ● 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 the Fund to underperform the broader stock market.

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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