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Market Commentary

  • Mounting trade tensions and political uncertainty in Europe dominated the headlines. The trade dispute between the US and China intensified, with both countries increasing tariffs. US President Donald Trump also threatened to impose tariffs on Mexico in retaliation for illegal immigration.
  • Most global sovereign yields declined sharply over the period amid an unexpected escalation in US-China trade tensions and rising concerns about slowing global growth. The US Treasury yield curve inverted between the three-month and 10-year segments of the curve, with the 10-year yield hitting a 21-month low. Markets have now priced in 50 basis points1 of rate cuts by the US Federal Reserve (Fed) in 2019. In Europe, German bund yields reached their lowest level on record. Australian yields dipped after the Reserve Bank of Australia Governor Philip Lowe strongly signaled that a rate cut could be coming in June.
  • The US dollar (USD) appreciated against most major currencies. The British pound was the worst performer among G10 currencies, in the face of deepening Brexit uncertainty following the announcement of UK Prime Minister Theresa May’s intention to step down in June.

Portfolio Performance

  • Hartford World Bond Fund’s performance was positive over the month with both global government core strategies and opportunistic sources of return contributing.
  • In global government core rates, dollar bloc and European economies benefitted as rates declined broadly over the month.
  • In core currency, our exposure to the Japanese yen (JPY) contributed as we saw a move to safe-haven currencies over the period given the increase in trade tensions.
  • Macro-driven duration2 strategies were positive. Our overweight duration positions to the front end of the US, UK, Australian and New Zealand curves drove positive performance as de-risking across asset classes led sovereign yields lower. In the UK, Brexit uncertainty deepened after Prime Minister May announced her intention to resign.
  • Our macro-driven currency strategies contributed positively to performance. Our overweight to the JPY versus the euro and the USD was beneficial given a uniform risk-off move as trade conflicts intensified and global growth showed signs of weakening. This was partly offset by an overweight to the Mexican peso, which detracted from performance. The currency declined late in the month after the US government threatened to increase tariffs effective June 10 unless the “illegal immigration problem is remedied.”
  • Within opportunistic sources, emerging markets and high yield detracted, while our securitized exposure contributed modestly to total return performance.
  • The Fund underperformed the benchmark because the Fund had a shorter duration during a time when most global sovereign yields fell.
Monthly     Quarterly
Performance (%)
Average Annual Total Return
As of 5/31/19 MTD YTD 1 Year 3 Year 5 Year Since Inception
Hartford World Bond Fund I 1.22 2.80 5.56 3.00 2.34 3.36
Hartford World Bond Fund F 1.22 2.82 5.72 3.09 2.39 3.39
Hartford World Bond Fund Y 1.22 2.80 5.67 3.07 2.44 3.45
FTSE World Government Bond Index 1.72 2.98 2.79 1.45 0.54 --
Morningstar Category: World Bond 0.55 3.42 2.97 2.72 1.14 --
Bloomberg Barclays US Aggregate Bond Index 1.78 4.80 6.40 2.50 2.70 --


  Net Gross
Class I    0.76%    0.76%  
Class F    0.67%  0.67%
Class Y    0.74%  0.78%

Expenses as shown in the Fund’s most recent prospectus. Gross expenses do not reflect contractual fee waivers or expense reimbursement arrangements. Net expenses reflect such arrangements only with respect to Class Y. These arrangements remain in effect until 2/29/20 unless the Fund’s Board of Directors approves an earlier termination.

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of the investment will fluctuate so that investors' 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.

Share Class Inception: I, Y – 5/31/11; F – 2/28/17

Performance shown prior to the inception of a class reflects performance and operating expenses of another class(es) (excluding sales charges, if applicable). Had fees and expenses of a class been reflected for the periods prior to the inception of that class, performance would be different. Since inception (SI) performance is from 5/31/11. Performance and expenses for other share classes will vary. Additional information is in the prospectus. Performance and expenses for other share classes will vary. Additional information is in the prospectus.

Portfolio Positioning & Market Outlook

  • Portfolio duration increased to 3.48 years at month end, largely due to the increase in our strategic market exposure.
  • In core currency, we increased our exposure to the JPY given the escalation in trade uncertainty.
  • In opportunistic macro duration strategies, we are tactically trading duration given the worsening outlook for global growth and intensifying trade disputes. Specifically, we are overweight the UK and Australia as we believe their central banks are likely to maintain accommodative policy.
  • In opportunistic currency strategies, we are overweight the JPY as the currency should act as a hedge against a slowdown in global growth, trade war risks, and a dovish Fed. Additionally, we are underweight the euro given further interest-rate cuts are unlikely and the region needs a weaker currency to maintain loose monetary conditions.
  • We have shifted to a more cautious outlook for global investment-grade corporate bonds, and expect economic policy uncertainty to continue driving credit spread volatility.

Sector Exposure (%)

As of 5/31/19


Contribution to Duration (%)

As of 5/31/19 Fund Benchmark3
Canada 20.97 1.33
New Zealand 16.78 0.00
United States 15.45 29.40
United Kingdom
11.24 8.61
Sweden 10.13 0.21
Norway 7.55 0.12
Australia 6.94 1.40
South Korea
5.53 0.00
Denmark 4.15 0.47
South Africa
-5.11 0.42

Currency Exposure (%)

As of 5/31/19 Fund Benchmark3
US Dollar 82.94 38.37
Japanese Yen 21.81 19.29
South African Rand 1.64 0.46
Mexican Peso 1.26 0.66
Australian Dollar 0.35 1.63
UK Sterling 0.27 5.19
Offshore Chinese Renminbi -0.28 0.00
Polish Zloty -0.56 0.49
Hungarian Forint -0.73 0.00
Euro Currency -6.53 30.76

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. The Fund may allocate a portion of its assets to specialist portfolio managers, which may not work as intended. ● Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. ● Obligations of U.S. Government agencies are supported by varying degrees of credit but are generally not backed by the full faith and credit of the U.S. Government. ● Investments in high-yield (“junk”) bonds involve greater risk of price volatility, illiquidity, and default than higher-rated debt securities. ● Mortgage related- and asset-backed securities’ risks include credit, interest-rate, prepayment, and extension risk. ● Derivatives are generally more volatile and sensitive to changes in market or economic conditions than other securities; their risks include currency, leverage, liquidity, index, pricing, and counterparty risk. ● 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. ● The Fund may invest in a smaller number of issuers, so it may be more exposed to risks and volatility than a more broadly diversified fund. ● Restricted securities may be more difficult to sell and price than other securities.

1A basis point 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.

2Duration is a measure of the sensitivity of an investment’s price to nominal interest-rate movement.

3Benchmark is the FTSE World Government Bond Index



Index Definitions

FTSE World Government Bond Index is a market-capitalization weighted index consisting of government bond markets. Country eligibility is determined based on market capitalization and investability criteria. All issues have a remaining maturity of at least one year.

Bloomberg Barclays U.S. Aggregate Bond Index is composed of securities from the Bloomberg Barclays Government/Credit Bond Index, Mortgage-Backed Securities Index, Asset-Backed Securities Index, and Commercial Mortgage-Backed Securities Index.

All rights in the FTSE World Government Bond Index (the “Index”) vest in the applicable company in the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”) which owns the Index. FTSE® and Russell® (together “FTSE Russell”) are trademarks of the relevant LSE Group company and are used by any other LSE Group company under license. The LSE Group does not accept any liability whatsoever to any person arising out of the use of, reliance on or any error in the Index. The LSE Group makes no claim, prediction, warranty or representation as to the results or the suitability of the Index for the purpose to which it is being used by Hartford Funds.

Additional Information Regarding Bloomberg Barclays Indices Source: 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.

Indices are unmanaged and not available for direct investment.

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