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Charts That Got Us Thinking

4Q 2019 Outlook: Will consumers catch the global economy’s cold?

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Multi-asset Views


Nanette Abuhoff Jacobson's views are relatively consistent with last quarter. Growth is slowing, and investors should be positioned defensively.

Nanette is a managing director and multi-asset strategist at Wellington Management and Global Investment Strategist for Hartford Funds.


As of September 2019. | Source: Wellington Management

Multi-asset Views

Multi-asset outlook process


Nanette thinks fundamentals, policy, and valuations drive markets on a 6-12 month time period.


As of September 2019. | Source: Wellington Management.

Multi-asset Views

The Fed may struggle to deliver what markets expect


The market could be disappointed because it expects much more Federal Reserve (Fed) easing than the Fed actually plans to do.


Market as of 20 September 2019; Fed as of 18 September 2019 | Market and Federal Reserve expectations for Fed funds rate at end of each year. | Actual results may vary, perhaps significantly, from the forecasts presented. | Sources: Federal Reserve, Bloomberg, Wellington Management

Multi-asset Views

It’s time to rotate into quality and safety-oriented factors
Factor families: Results across the cycle


Safe, high-quality companies have tended to outperform during the late and slowdown phases of the business cycle.


Each bar represents the average monthly excess return relative to the MSCI USA Index for factors within each family. Factor category definitions: Risk-seeking: Factors characterized by a wide range of expected outcomes (e.g., high EPS dispersion, high beta); Mean-reversion: Factors characterized by an expected convergence toward a mean value (e.g., low P/E ratio); Trend-following: Factors characterized by the expectation of a continuation of a trend (e.g., positive earnings revisions); Risk-aversion: Factors characterized by a narrow range of expected outcomes (e.g., low volatility) | For illustrative purposes only. | Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. | Sources: FactSet, FTSE, and Wellington Management | Please see representative index definitions below.

Global Fundamentals

Global growth is deteriorating


Money supply is growing slowly, which suggests the global economy will continue to slow.


1Purchasing Managers Index (PMI) is an indicator of the economic health of the manufacturing sector. A reading above 50 signals economic expansion; below 50 signals contraction. 2GDP-weighted M1 money supply includes US, Europe, Japan, and China | Sources: Bloomberg, Markit, Wellington Management | Chart data: July 1997 – August 2019. X-axis scale range is January 1998 to February 2020 due to M1 being forwarded 6 months. M1 data is from July 1997 to August 2019 (i.e., first data point represents July 1997 and final data point represents August 2019). PMI data is from January 1998 – August 2019.

Global Fundamentals

Will consumers catch the global economy’s cold?
Consumer and business confidence have diverged


Consumer sentiment is measured by global consumer confidence, while manufacturing sentiment is measured by global industrial confidence. There’s currently a gap between the two, and we should be concerned that consumer confidence could slow.


Source: Refinitiv Datastream | Chart data: January 2003 – June 2019. Global Industrial confidence: January 2003, Global consumer confidence: January 2003 – May 2019

Regional Equities

Trade uncertainty weighs on US businesses


Trade uncertainty has a weak, but positive, relationship with manufacturing PMI and could weigh it down going forward.


Sources: Baker, Bloom & Davis, Institute for Supply Management, Bloomberg | Chart data: December 1995 – August 2019

Regional Equities

US consumers are optimistic


Despite trade issues and manufacturing weakness, US consumers are still doing relatively well.


Sources: Conference Board, University of Michigan | Chart data: December 1995 – September 2019

Regional Equities

Trade war could disrupt supply chains and incur costs


Tranche 4 tariffs are largely consumer goods. If tariffs are implemented the US consumer could suffer, and the US could face a recession.


As of December 2018 | Sources: US Census Bureau, Otexa, Wellington Management

Regional Equities

US equities have tended to outperform in choppy markets


Around 80% of the time when Japan, Europe, or Emerging Markets (EM) have had negative quarterly returns, the US has outperformed. Therefore, the US appears to be a relatively safe equity market.


Time period: 1999 – 2018. Number of observations: Japan 37 negative quarters, Europe 34 negative quarters, Emerging markets 31 negative quarters. For example, during that time period the Japan market experienced 37 quarters of negative performance out of which the US market outperformed 31 quarters (84%) and underperformed 6 quarters (16%). | Past performance does not guarantee future results. | Sources: Bloomberg, Wellington Management

Regional Equities

Can European consumers endure the slowdown?


European consumers are doing well while manufacturers are in recession.


Sources: Bloomberg, Wellington Management | Chart data: November 2000 – September 2019

Regional Equities

European consumers still in decent shape


European consumers are buoyed by strong income and low unemployment.


Sources: Bloomberg, Wellington Management | Chart data: March 2000 – June 2019

Regional Equities

Japan depends on the yen


Japan’s economy underperforms the global economy when the Yen appreciates.


Past performance does not guarantee future results. Sources: Haver, Markit, Deutsche Bank, Wellington Management | Chart data: November 2006 – August 2019. X-axis scale range is May 2007 to February 2020 due to trade-weighted yen being forwarded 6 months. Trade-weighted yen data is from November 2006 to August 2019 (i.e., first data point represents November 2006 and final data point represents August 2019). Japan-global PMI data is from May 2007 – August 2019.

Regional Equities

EM equities tend to underperform later in the economic cycle
Late stage and bust


EM equities tend to perform poorly during late stage and bust economic cycles.


US Treasury 7 – 10 yrs: ICE BofAML US Treasury 7 – 10 Year Index (Apr 1973 – Sep 2018); US Investment Grade (US IG): ICE BofAML US Corporate Master Index (Dec 1972 – Sep 2018); US high yield: ICE BofAML US High Yield Index (Aug 1986 – Sep 2018); EM Debt (EMD): JP Morgan EMBI+ Index (Jan 1994 – Sep 2018); EM equities: MSCI Emerging Markets Index (Dec 1987 – Sep 2018) | Past performance does not guarantee future results. Investors cannot directly invest in an index. | Sources: Haver, Datastream, Wellington Management. | Please see representative index definitions below.

Regional Equities

Valuations relatively attractive outside US


US equity valuations are expensive, while overseas valuations are relatively cheap. However, equity valuations aren’t particularly good predictors of returns over the next 6-12 months, so they’re a relatively small piece of Nanette’s outlook process.


1Price-to-book is the ratio of a stock’s price to its book value per share.
2Shiller P/E ratio is a valuation measure, generally applied to broad equity indices, that uses real per-share earnings over a 10-year period.
As of 31 August 2019 | Sources: MSCI, Datastream, Wellington Management

Regional Equities

Growth fundamentals favor EM


The dependency ratio is the number of people who are not working age divided by the number of people who are working age. A higher ratio is bad because it depresses economic growth. In this framework, EM should grow faster than developed markets (DM).


Dependency ratio is calculated as the number of people younger than 15 years old, older than 64 years old, divided by the number of people aged 15 – 64 years old. | Past performance does not guarantee future results. Actual results may differ significantly from projections. | Source: Haver Analytics | Chart data: actual: 1989 – 2017, forecasted: 2018 – 2050

Credit

Fixed income is playing diversification role


The correlation between stocks and bonds should fall as the Fed begins easing policy.


Shaded areas represent US tightening cycles. Past performance does not guarantee future results.
Diversification does not ensure a profit or protect against a loss in a declining market. | Source: Datastream Chart data: 30 June 1988 – 9 September 2019 | Please see representative index definitions below.

Credit

Credit spreads are around fair value


When spreads are trading at about fair value, they look cheaper than US equity valuations.


1Option-adjusted spread (OAS) is a measurement tool for evaluating yield differences between similar-maturity fixed-income products with different embedded options. | Sources: Barclays, Wellington Management

Credit

Benign default environment


Defaults are low because rates are low, and the US economy is doing well enough to allow companies to service their debt.


Actual results may vary, perhaps significantly, from the estimated data presented | Source: Moody’s | Chart data: actual December 1996 – July 2019, estimated August 2019 – July 2020

Credit

EM debt: Wide divergence between high and low quality


Spreads in the JP Morgan Emerging Market Bonds Index Plus (EMBI+) are wide because high-yielders have seen a widening in spreads, while investment-grade bond issuers in EMBI+ have seen spreads compress.


*EM debt spreads look attractive at the index level (light blue line), but when we look at just the investment grade components of EMBI+, spreads are much less attractive. EMBI+ is the JP Morgan Emerging Market Bonds Index Plus | Past performance does not guarantee future results. | Source: Bloomberg | Chart data: 13 January 2011 – 9 September 2019 | Please see representative index definitions below.

Credit

Spreads indicate positive excess returns:
High yield


Current high-yield bond spreads are consistent with positive excess forward returns.


Past performance does not guarantee future results. Sources: Barclays, Wellington Management

Credit

Spreads indicate positive excess returns:
Corporates


Current BBB spreads are consistent with positive excess forward returns.


Past performance does not guarantee future results. Sources: Barclays, Wellington Management

Credit

BBBs remain well-positioned to service higher debt levels


BBB-rated companies generate ample free cash flow to service their debt.


Past performance does not guarantee future results. | Source: Capital IQ | Chart data: March 1995 – June 2019 | Please see representative index definitions below.

Credit

Securitized assets offer attractive yields


Securitized credit looks attractive based on its spreads.


As of 25 September 2019 | Sources: JP Morgan, Wellington Management | A Collateralized Loan Obligation (CLO) is a security backed by a pool of debt. Commercial Mortgage-Backed Securities (CMBS) are a type of mortgage-backed security that’s secured by a loan on a commercial property.

Risks

Americans are skeptical about China’s trade policies


The Trump administration and politicians on both sides of the aisle favor being tough on China because Americans perceive that China is treating the US unfairly.


Replies of “Don’t know/no opinion” have been excluded. As a result, “Fair” and “Unfair” responses will not sum to 100% | Source: https://news. gallup.com/poll/236843/americans-say-china-trade-unfair-trade-canada-fair.aspx | Poll conducted June 18 – 24, 2018. Question: For the following countries, please tell me if you believe each has a fair trade policy or an unfair trade policy with the United States.

Risks

President Trump is vulnerable on the economy


Trump may feel pressure to end the trade war because it’s hurting the economy, which could hamper his prospects for reelection.


*Percentage approval rating differential between approval/disapproval as measured via Real Clear Politics survey amalgamations. Source: Real Clear Politics | Chart data: January 2017 – September 2019

Risks

Will swing states turn on Trump?
2016 US election and Trump’s current net approval ratings


The colors represent the 2016 presidential election outcome. The numbers show President Trump’s current net approval ratings. Many states that voted for Trump in 2016 and many swing states have net negative current approval ratings. Thus, Trump may feel pressure to boost the economy by ending the trade war.


Shading represents the net percentage of votes won in each state in the 2016 presidential election. The numbers represent net approval ratings for President Trump as of August 2019. | Thicker outlines indicate swing states. According to Politico, these states were “selected after weighing a variety of factors including polling, demography, voter registration, early ad spending, campaign staffing, and recent and past electoral history.” Most of the states have been characterized as swing states in most of the recent elections, with the exception of Michigan and Pennsylvania, neither of which had voted red since 1988. The reason for categorizing them as swing states was largely Trump-specific. | Sources: Net approval: https://morningconsult.com/trackingtrump- 2/; election results: https://www.nytimes.com/elections/2016/results/president

Risks

Upside risk: Value stocks primed for recovery?


One risk to Nanette’s relatively defensive view is that growth picks up and value stocks start to outperform. Value could be primed for recovery given how poorly it has done relative to growth since the global financial crisis.


Past performance does not guarantee future results. | Shaded areas represent NBER US recessions | Sources: Bloomberg, NBER Chart data: September 1988 – 20 September 2019 | Please see representative index definitions below.

Risks

Shift towards populism in US and around the world


The market may need to contend with a democrat in office, which could entail tax hikes, more regulation, and increased entitlement spending.


Sources: Haver Analytics, Wellington Management | Chart data: 1968 – 2018

Portfolio Construction

Consider diversifying exposure across economic environments


Diversifying portfolio exposure across all four possible economic environments can be a prudent approach.


Diversification does not ensure a profit or protect against a loss in a declining market.
REITs: Real Estate Investment Trust
TIPS: Treasury Inflation Protected Securities
ILBs: Inflation-Linked Bonds
MBS: Mortgage-Backed Securities
TIPS: Treasury-Inflation Protected Securities

The example presented is for illustrative purposes and reflects the current opinions of Wellington Management Global Multi-Asset StrategiesSM team as of the date appearing in this material only. This is based on historical assumptions and is not intended to be a prediction of how any asset class will perform in the future. | Economic environments are defined by year-over-year changes in GDP growth and inflation. Growth: + GDP growth, - inflation. Weak growth: - GDP growth, - inflation. Inflation: + GDP growth, + inflation. Stagflation: - GDP growth, + inflation.

Buying stocks when fear runs high has historically led to long-term gains


*This column shows the S&P 500 Index’s one-day loss on the date shown in column 1.
Past performance does not guarantee future results. Assumes reinvestment of capital gains and dividends and no taxes.
1The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) is a key measure of market expectations of near‐term volatility conveyed by S&P 500 stock index option prices. VIX, commonly referred to as the "Fear Index," is the ticker symbol for the CBOE's Volatility Index and measures the market's expectation of 30-day volatility. VIX levels below 20 reflect complacency, while levels of 40 or higher reflect extremely high levels of volatility.
Data Sources: Morningstar and Hartford Funds, 1/19

Intra-year dips in the S&P 500 Index happen frequently


Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. Assumes reinvestment of capital gains and dividends and no taxes. Drawdown refers to the largest market drop from peak to trough during the calendar year. | Data Sources: Morningstar and Hartford Funds, 1/19

Intra-year dips in emerging-market equities happen frequently


Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. Assumes reinvestment of capital gains and dividends and no taxes. Drawdown refers to the largest market drop from peak to trough during the calendar year. | Data Sources: Morningstar and Hartford Funds, 1/19

Are you an opportunistic or apprehensive investor?


1T-Bills are guaranteed as to the timely payment of principal and interest by the U.S. Government and generally have lower risk-and-return than bonds and equity. Equity investments are subject to market volatility and have greater risk than T-Bills and other cash investments.
Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. Assumes reinvestment of capital gains and dividends and no taxes. | Data Sources: Thomson Reuters and Hartford Funds, 1/19.

The cyclical nature of active and passive investing


While passive large-blend funds have performed well in recent years, a longer-term view shows that active and passive large-blend funds have routinely traded periods of outperformance.


Performance for the Morningstar Large Blend Category is net of fees. “Actively Managed Large Blend” is made up of funds from the Morningstar Large Blend category that are not index or enhanced index funds. “Passively Managed Large Blend” is represented by the Morningstar S&P 500 Tracking Category.
Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. | Data Sources: Morningstar and Hartford Funds, 1/19

Are value stocks poised to outperform growth stocks after a long period of underperformance?


While growth stocks and value stocks historically alternate periods of outperformance, growth stocks have generally outperformed value stocks since February 2009.


Growth stocks are represented by S&P 500 Growth Index. Value stocks are represented by S&P 500 Value Index. The chart shows the values of the S&P 500 Value Index’s returns minus the S&P 500 Growth Index’s returns. When the line is above 0, value stocks outperformed growth stocks. When it is below 0, growth stocks outperformed value stocks. | Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. | Data Sources: Morningstar and Hartford Funds, 10/19 | Please see representative index definitions below.

Are international stocks poised to outperform US stocks after a long period of underperformance?


The average performance cycle for US equities versus international equities has historically lasted 7.5 years. US equities have outperformed international equities over the past 8.6 years, indicating the cycle may be getting ready to turn.


US Equity is represented by S&P 500 Index. International Equity is represented by MSCI World ex USA Index. The chart shows the values of the S&P 500 Index’s returns minus the MSCI World ex USA Index’s returns. When the line is above 0, domestic stocks outperformed international stocks. When it is below 0, international stocks outperformed domestic stocks. | Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. | Data Sources: Morningstar and Hartford Funds, 10/19

Dividend-paying stocks have significantly outperformed dividend non-payers in the long run


Companies that grew or initiated a dividend have historically enjoyed a significant performance advantage.


Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. The graph is not representative of any Hartford Fund’s performance, and does not take into account fees and charges associated with actual investments.
Dividend Growers & Initiators - Grew or initiated a dividend in the past 12 months
Dividend Payers - Paid a dividend in the past 12 months
No Change - Maintained their dividend level in the past 12 months
Dividend Non-Payers - Did not pay a dividend in the past 12 months
Dividend Cutters & Eliminators - Lowered or eliminated their dividends in the past 12 months

Source: Ned Davis Research, 1/19.

Timing the market is impossible


If you missed some of the market’s best months over the past 30 years, you would have been better off buying lower-risk Treasury Bills.


Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only. Data Sources: Ned Davis Research and Hartford Funds, 1/19.

Asset class returns vs. the average investor


According to a study by Dalbar, the average investor has underperformed both equity and bond indices by buying and selling at the wrong time.


Performance data for indices represents a lump sum investment in January 1999 to December 2018 with no withdrawals. US Equities are represented by the S&P 500 Index. US Bonds are represented by the Bloomberg Barclays US Aggregate Bond Index. Indices are unmanaged, unavailable for direct investment, and do not reflect fees, expenses, or sales charges. | Unmanaged index returns do not reflect any fees, expenses, or sales charges. Index performance is not indicative of any Hartford fund.
See Index Definitions below for descriptions.
Average equity investor and average bond investor performance results are calculated using data supplied by the Investment Company Institute. Investor returns are represented by the change in total mutual fund assets after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs. After calculating investor returns in dollar terms, two percentages are calculated for the period examined: Total investor return rate and annualized investor return rate. Total investor return rate is determined by calculating the investor return dollars as a percentage of the net of the sales, redemptions, and exchanges for each period.
Dalbar’s Quantitative Analysis of Investor Behavior Methodology - Dalbar’s Quantitative Analysis of Investor Behavior uses data from the Investment Company Institute (ICI), Standard & Poor’s and Barclays Index Products to compare mutual fund investor returns to an appropriate set of benchmarks. Covering the period from January 1, 1999, to December 31, 2018, the study utilizes mutual fund sales, redemptions and exchanges each month as the measure of investor behavior. These behaviors reflect the “average investor.” Based on this behavior, the analysis calculates the “average investor return” for various periods. These results are then compared to the returns of respective indices.

Are you prepared for duration risk?


In June of 2017, the duration of the Bloomberg Barclays US Aggregate Bond Index exceeded six years for the first time since 1978. Fixed-income investors should consider evaluating the duration risk in their portfolios.


Duration is a measure of price sensitivity to interest rate changes. | Data Sources: Barclays Live, Bloomberg, and Hartford Funds, 10/19. For illustrative purposes only.

Hypothetical impact of rising rates on fixed income


Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. For illustrative purposes only.
Fixed-income sectors shown above are provided by Barclays and are represented by the following Bloomberg Barclays indices – Broad Market: US Aggregate Bond; Mortgage-backed securities: US MBS Fixed-Rate; Investment Grade Corporates: US Corporate Bond; Municipals: Municipal Bond 10-year; High Yield: US High Yield Corporate Bond; Floating Rate Notes: US FRN (BBB); Convertibles: US Convertible Liquid Bond; Asset-backed securities: Fixed-Rate Asset-Backed Securities (ABS); CMBS: US CMBS. Please see representative index definitions on page 53. Change in price is calculated as New Price = (Price + (Price * -Duration* Change in Interest Rates))+(0.5 * Price * Convexity * (Change in Interest Rates)^2) | Data Sources: Bloomberg and Hartford Funds, 10/19.

Tax-equivalent yields


1The tax-equivalent yield is the pretax yield that a taxable bond needs to possess for its yield to be equal to that of a tax-free municipal bond. | Data Sources: Bloomberg and Hartford Funds, 10/19.

Municipal bond yields look attractive


*Correlation is a statistical measure of how two investments move in relation to each other. A correlation of 1.0 indicates the investments have historically moved in the same direction; a correlation of -1.0 means the investments have historically moved in opposite directions; and a correlation of 0 indicates no historical relationship in the movement of the investments.
Tax-equivalent yields are based on 37% federal income tax rate. Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment.
1The municipal curve is populated with U.S. municipal general obligations with an average rating of AA+ for Moody’s and S&P.
2The Bloomberg Valuation Service (BVAL) curve is populated with U.S. dollar-denominated senior-unsecured fixed-rate bonds issued by domestic companies with a BBG rating of investment grade.
3The U.S. Treasury curve is comprised of U.S. dollar-denominated U.S. Treasury active securities.
4Municipal Bonds are represented by the Bloomberg Barclays Municipal Bond Index, which covers the U.S. dollar-denominated long term tax exempt bond market.
5The Bloomberg Barclays U.S. Aggregate Bond Index is an index comprised of government securities, mortgage-backed securities, asset-backed securities, and corporate securities to simulate the universe of bonds in the market.
6The Bloomberg Barclays U.S. Treasury Index is an unmanaged index of public obligations of the U.S. Treasury with a remaining maturity of one year or more.
7Bloomberg Barclays Global Aggregate ex-USD Bond Index provides a broad-based measure of the international investment-grade bond market hedged against the U.S. dollar.
Data Sources: Bloomberg and Hartford Funds, 10/19.

Multi-sector credit shows characteristics of a defensive-equity alternative


A multi-sector credit approach that equally blends high-yield bonds, bank loans, and EM debt has historically provided equity-like returns with significantly less volatility than equities.


1MSC hypothetical blend is comprised of 1/3 BofA Merrill Lynch Global High Yield Constrained Index, 1/3 Credit Suisse Leveraged Loan Index, and 1/3 JPMorgan Emerging Markets Bond Index Plus. Past and hypothetical performance are no guarantee of future results and an investment can lose value. The MSC hypothetical blend and its performance are hypothetical and not representative of an actual fund. Simulated performance is developed with the benefit of hindsight (i.e., actual knowledge of market conditions and the results of similar strategies) and thus has inherent limitations. Results are presented gross of fees; if fees were applied, returns would have been lower. | Sharpe Ratio is a measure of the excess fund return per unit of risk, as measured by standard deviation. | Sources: Bank of America Merrill Lynch, Credit Suisse, JPMorgan, MSCI, and Wellington Management | Please see representative index definitions below.

Fund flows


TOP: Data includes flows through 8/19 and excludes ETFs. BOTTOM: Data includes flows through 8/19 and excludes ETFs. | ICI data subject to periodic revisions. World equity flows are inclusive of emerging market, global equity and regional equity flows. | Hybrid flows include asset allocation, balanced fund, flexible portfolio and mixed income flows. | Data Sources: Investment Company Institute and Hartford Funds, 10/19.

Multi-asset views

Multi-asset outlook process

The Fed may struggle to deliver what markets expect

It’s time to rotate into quality and safety-oriented factors

Global growth is deteriorating

Will consumers catch the global economy’s cold?

Trade uncertainty weighs on US businesses

US consumers are optimistic

Trade war could disrupt supply chains and incur costs

US equities have tended to outperform in choppy markets

Can European consumers endure the slowdown?

European consumers still in decent shape

Japan depends on the yen

EM equities tend to underperform later in the economic cycle

Valuations relatively attractive outside US

Growth fundamentals favor EM

Fixed income is playing diversification role

Credit spreads are around fair value

Benign default environment

EM debt: Wide divergence between high and low quality

Spreads indicate positive excess returns: High yield

Spreads indicate positive excess returns: Corporates

BBBs remain well-positioned to service higher debt levels

Securitized assets offer attractive yields

Americans are skeptical about China’s trade policies

President Trump is vulnerable on the economy

Will swing states turn on Trump?

Upside risk: Value stocks primed for recovery?

Shift towards populism in US and around the world

Consider diversifying exposure across economic environments

Buying stocks when fear runs high has historically led to long-term gains

Intra-year dips in the S&P 500 Index happen frequently

Intra-year dips in emerging-market equities happen frequently

Are you an opportunistic or apprehensive investor?

The cyclical nature of active and passive investing

Are value stocks poised to outperform growth stocks after a long period of underperformance?

Are international stocks poised to outperform US stocks after a long period of underperformance?

Dividend-paying stocks have significantly outperformed dividend non-payers in the long run

Timing the market is impossible

Asset class returns vs. the average investor

Are you prepared for duration risk?

Hypothetical impact of rising rates on fixed income

Tax-equivalent yields

Municipal bond yields look attractive

Multi-sector credit shows characteristics of a defensive-equity alternative

Fund flows

Bloomberg Barclays Municipal Bond 10-year Index is a sub-index of the Barclays Municipal Bond Index. It is a rules-based market value-weighted index of bonds with maturities of 10 years engineered for the tax-exempt bond market.
Bloomberg Barclays US Aggregate Bond Index is composed of securities from the Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset- Backed Securities Index, and Commercial Mortgage-Backed Securities Index.
Bloomberg Barclays US CMBS Index measures the market of conduit and fusion Commercial Mortgage-Backed Securities deals with a minimum current deal size of $300 million.
Bloomberg Barclays US Convertible Liquid Bond Index tracks US convertible securities, such as convertible bonds.
Bloomberg Barclays US Corporate Bond Index measures the investment grade, fixed-rate, taxable corporate bond market.
Bloomberg Barclays US Fixed-Rate Asset-Backed Securities (ABS) Index covers fixed-rate ABS with the following collateral types: credit cards, autos, home equity loans and stranded-cost utility (rate reduction bonds).
Bloomberg Barclays US FRN (BBB) is a subset of the US Floating-Rate Note (FRN) Index, which measures the performance of USD denominated, investment-grade, floating-rate notes across corporate and government-related sector.
Bloomberg Barclays US High Yield Corporate Bond Index is an unmanaged broad-based market-value weighted index that tracks the total return performance of non-investment grade, fixed-rate publicly placed, dollar-denominated and nonconvertible debt registered with the Securities and Exchange Commission.
Bloomberg Barclays US Long Treasury Index measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury. Treasury bills are excluded by the maturity constraint, but are part of a separate Short Treasury Index.
Bloomberg Barclays US MBS Fixed-Rate Index measures the performance of investment grade fixed-rate mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC).
ICE BofAML US Corporate Master Index tracks the performance of US dollar-denominated investment-grade rated corporate debt publicly issued in the US domestic market.
ICE BofAML US High Yield Index tracks the performance of US dollar-denominated below-investment- grade rated corporate debt publicly issued in the US domestic market.
ICE BofAML US Treasury 7 – 10 Year Index tracks the performance of US dollar-denominated below-investment-grade rated corporate debt publicly issued in the US domestic market.
J.P. Morgan Emerging Markets Bond Index Plus is a market capitalization-weighted index based on bonds in emerging markets.
MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of 21 emerging market country indices.
MSCI USA Index is designed to measure the performance of the large and mid cap segments of the US market. With 627 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in the US.
Russell 1000 Growth Index tracks the performance of large- and mid-capitalization U.S. equities that exhibit growth characteristics.
Russell 1000 Value Index tracks the performance of large- and mid-capitalization U.S. equities that exhibit value characteristics.
S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.

 

The Hartford Funds Ideas discussed here reflect the views of Hartford Funds as of September 30, 2019 and are subject to change without notice. These views are not intended to be a prediction of future events or a guarantee of future results. This material should not be considered investment advice or a recommendation to buy, hold, or sell any security.

Important Risks: Investing involves risk, including the possible loss of principal. • 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. • Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. • Investments in high-yield (“junk”) bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. • Municipal securities may be adversely impacted by state/local, political, economic, or market conditions. Investors may be subject to the federal Alternative Minimum Tax as well as state and local income taxes. Capital gains, if any, are taxable. • Bank loans can be difficult to value and highly illiquid; they are also subject to nonpayment, collateral, bankruptcy, default, extension, prepayment and insolvency risks. • U.S. Treasury securities are backed by the full faith and credit of the U.S. government as to the timely payment of principal and interest. • Commodities may be more volatile than investments in traditional securities. • Diversification does not ensure a profit or protect against a loss in a declining market.

The views expressed here are those of Nanette Abuhoff Jacobson. They should not be construed as investment advice. They are based on available information and are subject to change without notice. Portfolio positioning is at the discretion of the individual portfolio management teams; individual portfolio management teams and different fund sub-advisers may hold different views and may make different investment decisions for different clients or portfolios. This material and/or its contents are current as of the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management or Hartford Funds.

Additional Information About Index Providers:
Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). BARCLAYS® is a trademark and service mark of Barclays Bank Plc (collectively with its affiliates, “Barclays”), used under license. Bloomberg or Bloomberg’s licensors, including Barclays, own all proprietary rights in the Bloomberg Barclays Indices. Neither Bloomberg nor Barclays approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

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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