Hartford Funds expanded on its actively managed ETF lineup with a new bond strategy that hopes to maintain a certain level of tax awareness to maximize overall returns for investors.
Hartford partnered with Schroder Investment Management North America Inc. to launch the Hartford Schroders Tax-Aware Bond ETF (NYSEArca: HTAB), which has a 0.39% expense ratio.
The actively managed fund is subadvised by Schroder and is managed by Andrew B.J. Chorlton, Edward “Todd” H. Jewett, Richard A. Rezek Jr., Neil G. Sutherland and Julio C. Bonilla.
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The Hartford Schroders Tax-Aware Bond ETF seeks total return on an after-tax basis by investing in diversified fixed-income debt instruments of varying maturities, with a heavy 80% emphasis on USD-denominated, investment-grade debt instruments, according to a prospectus sheet.
The debt instruments may include securities issued or guaranteed by the U.S. government and its agencies, government-sponsored enterprise securities, corporate bonds, mortgage-backed securities, asset backed securities, municipal securities, sovereign debt and debt securities issued by supranational organizations. The securities may pay fixed, variable, or floating interest rates.
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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.