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Hartford Schroders International Multi-Cap Value Fund

May 2019 Monthly Update

Performance (%)
% (as of 5/31/2019)
Average Annual Total Returns % (as of 5/31/2019)
YTD 1YR 3YR 5YR 10YR SI
Hartford Schroders International Multi-Cap Value  I 4.65 -9.92 4.74 0.67 6.91 4.07
Benchmark 7.15 -6.26 6.72 1.31 5.80 ---
Morningstar Foreign Large Value Category 4.78 -8.92 3.81 -0.43 4.81 ---
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

Continued US-China trade tensions led investors to questions about the sustainability of global growth during May. This negative sentiment weighed on international equities leading to the MSCI ACWI ex USA Index selling off by more than 5% during the month, although international markets are still up over 7% year-to-date.

Heightened uncertainty and the return of volatility led to a strong preference for defensive equities with utilities, real estate, and healthcare stocks being some of the best performing. There was little difference between the MSCI ACWI ex USA Value1 and MSCI ACWI ex USA Growth2 Indices over the month of May, although the MSCI ACWI ex USA Value Index is still significantly behind its growth counterpart by 5.5% year-to-date.

The narrowing of the market toward defensive equities was a headwind over the month, with the Fund (Class I Shares) returning -6.65% in May, underperforming its benchmark, the MSCI ACWI ex USA Index, which returned -5.37%. Year-to-date, the Fund has lagged its benchmark, which represents the broader international market, but continues to outperform the MSCI ACWI ex USA Value Index, which returned 4.41% year-to-date. 

The majority of our underperformance during May was derived from our holdings in more trade-sensitive industries such as auto parts, chemicals, and machinery. In addition, our underweight exposure to defensive areas, including real estate and consumer staples, weighed on performance.

The main positive contributor in May came from our holdings in our preferred areas of defensive equities within telecommunications and healthcare. Furthermore, our avoidance of more expensive growth names within Asian emerging markets also benefited the Fund over the month.    

 

Portfolio Positioning

Our process focuses on selecting stocks that offer the right combination of affordability and business health as we continue to see many areas of international markets being overlooked. For example, we see opportunities across the full spectrum of value, from deep value in resources and Japan, to high-quality yield in consumer staples and healthcare companies. Given large swaths of the international market are trading at attractive valuations, we can afford to be more selective, allowing us to be conscious of the quality of the company to assess its risk.

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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.

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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