• Account Access
  • Contact Us

    Pre-Sales Support

    Mutual Funds and ETFs - 800-456-7526
    Monday-Thursday: 8:00 a.m. – 6:00 p.m. ET
    Friday: 8:00 a.m. – 5:00 p.m. ET

    ETF Trading Support - 415-315-6600
    Monday-Friday: 9:30 a.m. – 5:00 p.m. ET

    Post-Sales and Website Support
    Monday-Friday: 9:00 a.m. - 6:00 p.m. ET

  • Advisor Log In

Hartford Schroders International Stock Fund

April 2020 Monthly Update

Performance (%)
% (as of 4/30/2020)
Average Annual Total Returns % (as of 4/30/2020)
Hartford Schroders International Stock  I -13.77 -5.96 3.07 2.20 4.87 7.02
BENCHMARK -17.55 -11.51 -0.25 -0.17 2.89 ---
Morningstar Foreign Large Blend Category -17.95 -12.05 -1.35 -0.51 3.06 ---
Performance (%)
% (as of 3/31/2020)
Average Annual Total Returns % (as of 3/31/2020)
Hartford Schroders International Stock  I -20.42 -10.30 1.29 1.18 3.82 6.79
BENCHMARK -23.36 -15.57 -1.96 -0.64 2.05 ---
Morningstar Foreign Large Blend Category -23.43 -15.64 -2.58 -1.18 2.15 ---
SI = Since Inception. Fund Inception: 12/19/1985
Operating Expenses:   Net 0.85% |  Gross  0.85%
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 Alpha Fund. If Class I fees and expenses were reflected, performance would have differed. SI performance is calculated from 12/19/85.

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.


Market Review

Global equity markets rallied in April, as support measures aimed at mitigating the COVID-19 pandemic boosted investor confidence following sharp falls a month earlier. Economic data continued to illustrate the severity of the lockdown in April. Global Purchasing Managers’ Indices1 were largely below consensus and well below the worst point of the Global Financial Crisis as economic activity ground to a halt and unemployment spiked. Even so, markets registered one of their strongest rallies in decades following unprecedented stimulus delivery and signs of lockdown easing in some regions, which fueled investor optimism and short covering. The massive rally left many investors wondering whether markets had risen too far, too fast.

US and Asian markets posted the strongest gains while Eurozone equities also fared better in April, with various European countries beginning either to loosen lockdowns, or to outline how economic activity might resume over the coming months. Cyclical stocks largely led the market with the strongest gains in commodities, technology, and consumer discretionary, while more defensive areas such as utilities and consumer staples were relative laggards.


Performance Review

The Fund (Class I Shares) returned 8.37% in April, outperforming its benchmark, the MSCI ACWI ex USA Index, which returned 7.58%. Positions in consumer discretionary, financials, and information technology added the most. Materials were less supportive. European and Japanese positions performed well, while Pacific ex Japan and emerging markets detracted from the relative return.

Semiconductor maker Infineon Technologies AG performed well during the month despite a weaker economic environment. The company’s products are used in renewable energy and electric vehicles, and we believe that structural drivers, such as the move to cleaner energy sources, continue to support the long-term growth trajectory of the business. While we were not enthused by its acquisition of Cypress, Infineon has done a commendable job pivoting away from its legacy reliance on home into autos/industrial, and is well-positioned in the fast-growing silicon carbide market, which is a key component in enabling electric-vehicle battery producers to maximize their driving range and minimize cooling requirements.

Xero Ltd. performed well over the month despite the disruption affecting many of its subscribers as a result of the COVID-19 pandemic and subsequent shutdowns around the world. The company, which provides business accounting software to small businesses, has achieved robust growth in revenue and subscriber numbers. It has more than 1.5 million subscribers in its core markets of Australia, the UK, and New Zealand, and is the leader in the cloud accounting software market. We believe Xero is well-positioned for growth with a market-leading product and a strong relationship with accountants outside of the US. The company is also increasingly monetizing other services built on top of its small-business platforms, such as payments, lending, and payroll. As its software remains business-critical and less exposed to discretionary spending for its customers, we expect it will remain relatively resilient in the current challenging environment.

Nestle S.A. was a weaker holding in April as consumer staples lagged the market in favor of more cyclically-exposed industries that had sold off more sharply. The company—which remains focused in the growth areas of coffee, water, and pet care—reported very solid organic sales of 4.3% in the first quarter driven by its developed-market exposure and pet care division, which grew close to 14%. With a strong balance sheet and high amounts of cash, we believe Nestle is well positioned to withstand a potential revenue shock caused by COVID-19 and the subsequent economic downturn.

Pharmaceutical company Roche Holding AG was also weaker in April amid profit-taking, following a robust performance for the stock earlier in the year. In the first quarter, it received approval from the FDA for its first commercial test for COVID-19. The company has shown in the past that it is rapidly able to respond to higher demand, quickly developing new and innovative products. Although Roche faces a number of significant headwinds, such as greater competitive risk on key drugs losing patent protection from bio-similars, we believe that the company remains at the forefront of medical advances that will transform the treatment of diseases such as cancer. The company continues to demonstrate strong sales momentum on its new products, and it also continues to deliver positive data points on an underappreciated pipeline.   


Market Outlook

While challenging in the short term, sharp changes in market direction and polarized stock returns are to be anticipated over the coming months, as markets digest the impact of the demand shock on company fundamentals and begin to look toward recovery. With significant revisions to consensus earnings estimates and many companies pulling their guidance, continued volatility should be expected.

The quantum of the response to the crisis by central banks globally has been very significant and sparked a sharp rebound. The rally, however, belies the fact that the economic impact of COVID-19, and efforts to mitigate it, will be severe and will not be easily remedied by the action of central banks in the short term.

End-demand is unlikely to recover rapidly while many major economies are in lockdown. We have yet to see either a peak in global infection rates or a clear pathway for normalization. The next few weeks will be informative for both however, as we look for a change in trajectory of new cases across Europe, the US, and major emerging markets. On a positive note, there are signs of a normalization in China, South Korea, and Taiwan, as retail outlets and factories start to re-open. At the time of writing, there are tentative signs of stabilization in certain European countries, such as Spain, Austria, Germany, and France.

From an economic standpoint, it is not certain that we will see a V-shaped recovery as typically seen after sudden economic shocks. Instead, it is likely in our view that the global economy will take some time to recover—a U-shaped trajectory. Indeed, an L-shaped recovery—characterized by a steep decline in economic activity and only very slow recovery—is also a realistic probability. Shrinking demand has potentially catastrophic implications for employment, confidence, investment, and consumption, and there are real risks of a negative feedback loop affecting sales, profitability and for some, solvency. Governments across the globe are aware of this and responding with aggressive monetary and fiscal stimulus, with the US recently announcing a $2.3 trillion package focused on support for small businesses and consumers.

It remains to be seen how quickly the fiscal measures will feed through into economic activity; further measures seem likely to be required. In any event, in the near term, COVID-19 introduces significant business risk as revenue shortfalls put pressure on margins and cash flow. There is likely to be substantial financial stress in many parts of the economy in a number of countries, with leverage becoming a concern even at a time of continued low interest rates. These financial implications are only now starting to be seen in company guidance. So far, a majority of companies that have announced have either materially downgraded earnings or have suspended guidance altogether. In a number of industries, we have seen companies suspending dividend payments as companies are working to build up their cash buffers.

Adding to general levels of uncertainty, the recent sell-off in the oil markets is largely a sideshow to the main event. COVID-19 inevitably contributed to a softening in the demand outlook. The breakdown of talks between Russia and the Organization of the Petroleum Exporting Countries compounded a market already struggling from excess production and over-supply, proving to be the catalyst for dramatic falls. Without seeing material changes to the supply/demand balance, oil prices are likely to remain depressed and come under further pressure, with some commentators forecasting levels of support at $20/barrel.

As gloomy as the short-term economic picture clearly is, we are keen not to lose sight of the fact that COVID-19 will eventually pass, and that business and consumer confidence eventually will recover, bolstered by unprecedented levels of monetary and fiscal support. Economic recovery may be slow and gradual, but markets are likely to discount the recovery much sooner. In areas which have been particularly hard hit, there may well be a significant rebound in investor sentiment quite quickly once lockdowns are lifted—for example, in parts of the consumer space (such as leisure and restaurants), or in the industrial sector.

We are mindful that, after a prolonged period of underperformance by the more cyclical parts of the market (compared to growth and quality), expectations for many companies in that space are now very low. It will not take much improvement in economic fundamentals to generate significant operating leverage—and share-price appreciation—going forward.  However, many of these companies operate in heavily challenged industries and the risks are also acutely higher. As always though, selectivity will be important, since not all cyclical businesses will recover from their lows.

It is also worth mentioning that the impact of the virus in some cases may be lasting. The many unexpected outcomes of lockdowns, social distancing, and remote working may hasten the demise of established businesses in some areas (for example in travel, business interaction, retailing, etc.). It may also strengthen new business models in others, such as video communications, data centers, cloud service, e-commerce, and sports, as we adjust to a new way of living and working.

Finally, after quite some time where we have felt that equity valuations were full, we are now finding many very good and resilient businesses, with strong balance sheets, that are trading at valuations that should produce very attractive medium-term returns as earnings recover. As a result, we have a large pipeline of buy ideas for portfolios, and we expect to be taking advantage of the dislocation in markets to build positions in these businesses.

1 PMI (Purchasing manager’s index) is an indicator of the economic health of the manufacturing sector.


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.The Fund’s focus on investments in particular sectors may increase its volatility and risk of loss if adverse developments occur.

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.