“We think about risk is the primary starting point for the design of every strategy … What risk you want to take to enhance return,” Lucas said.
Specifically, the funds all share a security selection criteria broken by 50% value, 30% momentum and 20% quality. Additionally, the funds may also include the size and volatility factors where size refers to smaller companies historically outperforming and volatility covering companies that have exhibited a history of smaller swings.
Some may argue these are factors that show up in many single and multi factor ETFs, but it is the way a company combines them that helps differ their strategies from the competition.
“I’ll suggest that there’s a lot of variation in terms of the actual strategies that drive what results in the ETF,” Lucas said. “I think what’s particular for investors you want to understand what factors are used with the signals. How they’re weighted for the portfolio.”
By combining the factors, the Hartford smart beta ETFs may potentially improve return beyond traditional benchmarks, lessen unintended concentration risks and increase intended exposures to targeted factors. The ETF wrapper helps provide actively managed styles in a low cost, tax efficient and transparent structure.
Click here to read Hartford Funds’ 2017 Outlook on ETF Trends and NYSE’s exclusive 2017 Market Outlook Channel.