Related: 3 Long Term Bond ETFs Investors Should Know
In seeking its objective, the fund managers employ a tax-aware investing strategy to realize total return in the form of current income and price appreciation by balancing investment considerations and tax considerations. Consequently, the fund may favor tax-exempt municipal bond securities in its selection process, along with taxable securities where after-tax valuation is favorable.
Additionally, to maintain its tax-aware objective, the ETF sells securities when the anticipated performance benefit justifies gains, which includes minimizing the sale of securities with large unrealized gains, holding securities long enough to avoid short-term capital gains taxes, selling securities with a higher cost basis first and offsetting capital gains realized in one security by selling another security at a capital loss.
“Investors are seeking high quality fixed income solutions providing compelling after-tax returns at a competitive price,” Vernon Meyer, Chief Investment Officer of Hartford Funds, said in a note. “Further expanding our fixed income offerings allows us to match our strong mutual fund track record in tax-aware and municipal bond strategies with a similar investment approach in our growing ETF business.”
For more information on new fund products, visit our new ETFs category.