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Market Commentary

  • Constructive developments in trade war negotiations and solid US economic data supported fixed-income spread1 sectors, despite politically charged events in Latin America, Hong Kong, and the focus on upcoming UK general elections.
  • Most global sovereign yields edged higher on cautionary signals of progress toward a phase one trade deal between the US and China, stabilization in global activity indicators, and the increased likelihood of a Brexit deal agreement. Australian yields declined, driven by weak employment data, a downward revision of GDP forecast by the Reserve Bank of Australia, and Governor Lowe’s statement of plausible quantitative easing at a cash rate of 0.25%.
  • The US dollar (USD) rallied versus most currencies, supported by positive US activity data. The Swedish krona was the top-performing G10 currency. The Riksbank Governor Ingves reiterated the central bank’s intention to raise the repo rate in December and climb out of negative-rate territory. The Chinese renminbi gained, driven by improved sentiment on the US-China trade war. Latin American currencies slumped versus the USD as the region remained plagued by strikes and anti-government protests across multiple countries.

Portfolio Performance

  • On a total return basis, Hartford World Bond Fund performance was negative over the month with global government core exposures and opportunistic sources detracting. The Fund outperformed on an excess return basis relative to the FTSE World Government Bond Index primarily due to the Fund’s lower duration2 positioning and lack of exposure to poorly performing sovereigns such as Italy, Spain, and the UK.
  • In global government core rates, performance was neutral as exposure to government bonds that produced positive total returns (Australia) offset exposure to government bonds that generated negative total returns (Sweden, US).
  • Core currency detracted, driven by our foreign currency exposure including the Japanese yen (JPY), Swiss franc (CHF), and the euro. The USD rallied versus most currencies driven by the US Federal Reserve’s (Fed’s) constructive rhetoric.
  • Macro-driven duration strategies detracted. Our steepening bias in the US detracted as Fed chair Powell described the US economy’s glass as being “more than half full,” which resulted in US front-end yields moving higher relative to longer-end yields. Our tactical underweight to UK duration also detracted as rates declined mid-month following the UK services flash Purchasing Managers’ Index3 coming in at 48.6 versus an expected 50.1.
  • Our macro-driven currency strategies detracted from total returns due to our long to the JPY. The perceived safe haven currency depreciated as favorable Brexit developments and continued US-China trade talks spurred risk-on market movements.
  • Within opportunistic credit sources, our exposures to securitized and high-yield credit marginally contributed to total returns.
Monthly     Quarterly
Performance (%)
Average Annual Total Return
As of 11/30/19 MTD YTD 1 Year 3 Year 5 Year Since Inception
(5/31/11)
Hartford World Bond Fund I -0.65 3.51 5.23 3.37 2.32 3.24
Hartford World Bond Fund F -0.74 3.48 5.33 3.44 2.36 3.27
Hartford World Bond Fund Y -0.64 3.51 5.26 3.44 2.41 3.33
FTSE World Government Bond Index -1.16 5.60 8.13 3.79 1.84 --
Morningstar Category: World Bond -0.87 5.55 6.67 3.75 1.84 --
Bloomberg Barclays US Aggregate Bond Index -0.05 8.79 10.79 4.10 3.08 --

Expenses

  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.

Fund Inception: 05/31/2011
Share Class Inception:
I, Y – 05/31/11; F – 02/28/17

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 decreased to 2.72 years at month end, largely driven by the decrease in our opportunistic duration strategies. In macro duration we moved to an underweight duration position as economic data is stabilizing while US-China trade rhetoric is still positive.
  • In core currency, we maintained our non-USD exposure ahead of 2020 US Presidential elections, since rising political uncertainty and populism from the Left presents a structural challenge to the USD. In opportunistic currency strategies, we remain long the JPY and the CHF.
  • In opportunistic credit strategies, we retain selective exposure to corporates and securitized sectors.

Sector Exposure (%)

As of 11/30/19

wb-figure-2-11.30.19

Contribution to Duration (%)

As of 11/30/19 Fund Benchmark4
Canada 26.46 1.30
New Zealand 25.70 ---
Australia 23.43 1.36
Sweden 16.26 0.19
South Korea
13.67 ---
United States
8.81 30.41
Austria
4.20 1.52
Denmark
3.06 0.47
Germany -7.43 4.98
United Kingdom
-17.85 8.77

Currency Exposure (%)

As of 11/30/19 Fund Benchmark4
US Dollar 62.75 39.62
Japanese Yen 19.72 18.37
Swiss Franc 7.28 ---
Euro Currency 6.08 30.42
Australian Dollar 5.31 1.63
UK Sterling 2.26 5.18
Norwegian Krone 0.32 0.19
Swedish Krona -0.51 0.28
Turkish Lira -1.07 --
South African Rand -1.70 0.47

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.

1Spreads are the difference in yields between two fixed-income securities with the same maturity, but originating from different investment sectors.

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

3Purchasing 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.

4Benchmark 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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