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Hartford Schroders International Multi-Cap Value Fund

October 2019 Monthly Update

Performance (%)
% (as of 11/30/2019)
Average Annual Total Returns % (as of 11/30/2019)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 13.81 8.04 6.71 3.50 5.62 4.57
Benchmark 16.47 11.20 9.24 3.85 4.74 ---
Morningstar Foreign Large Value Category 13.75 7.80 6.62 2.46 3.95 ---
Performance (%)
% (as of 9/30/2019)
Average Annual Total Returns % (as of 9/30/2019)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 7.96 -5.61 3.60 1.98 5.16 4.21
Benchmark 11.56 -1.23 6.33 2.90 4.45 ---
Morningstar Foreign Large Value Category 8.85 -4.61 4.12 1.34 3.50 ---
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

International equity markets rose over the month of October amid easing trade tensions and supportive central banks. From a geopolitical perspective, the US and Chinese governments edged closer toward agreeing to a partial trade deal, while the UK once again edged back from the precipice of a no-deal Brexit. Global central banks reiterated their ongoing support and the US Federal Reserve cut interest rates for the third time this year by 25 basis points.1

Over the month, the broader MSCI ACWI ex USA Index returned 3.49%, bringing its year-to-date gains to 15.45%. From a style perspective, MSCI ACWI ex USA Growth Index2 was marginally ahead, returning 3.63% in October, while the MSCI AWCI ex USA Value Index3 lagged, returning 3.33%, unable to fully double down on a strong September. That said, there were encouraging signs of a modest broadening in market participation. In particular, there was evidence of a value recovery in areas such a healthcare, autos, and industrials. Conversely, the utilities, energy, and consumer staples sectors were significantly weaker.

The Fund (Class I Shares) returned 4.26% in October, outperforming its benchmark, the MSCI ACWI ex USA Index, and adding to the relative gains of September. The recent performance is closing the gap between the strategy and the benchmark, leaving the strategy behind the benchmark by 2.89% over the year. But, the strategy is now outperforming the MSCI ACWI ex USA Value Index by 2.06%, which returned 10.50% year-to-date.

Larger-than-index positions in healthcare outperformed, as well as overweight, non-index positions in technology. Our focus on fundamentals proved to be a tailwind as stock selection in consumer discretionary, industrial, and materials all added to the outperformance. Avoidance of consumer staples also added value, as this sector did not perform well over the month. Stock selection in real estate and utilities, areas we see unattractive from a valuation standpoint, was a slight drag on performance.

Regionally, our holdings in Japan outperformed, particularly in consumer discretionary and healthcare stocks such as Astellas Pharma. Broad based performance in the UK and Canadian names also benefitted the strategy. Strong performance in healthcare and technology—particularly in emerging markets (EM) in Asia—boosted relative performance.    

 

Portfolio Positioning

The Fund invests in less expensive companies that offer strong business quality, across all sectors and countries outside of the US. The largest overweights versus the benchmark are in communication services and energy companies. The strategy still retains its large underweight to consumer staples.

Regionally, the Fund’s largest overweight positions are in Japan and Pacific ex Japan. This is funded by underweight positions to continental Europe, Canada, and EM.

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1 A basis point is a unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

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.

3 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..

Indices are unmanaged and not available for direct investment. Diversification does not ensure a profit or protect against a loss.

 

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.

Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI's express written consent.

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