Hartford Funds expanded on its line of actively managed exchange traded fund strategies with a short-term bond option to help investors better cope with a rising interest rate environment.
On Thursday, Hartford Funds launched the actively managed Hartford Short Duration ETF (Cboe: HSRT), which has a 0.29% expense ratio.
Timothy E. Smith, Senior Managing Director at Wellington Management, Fixed-Income Portfolio Manager, will manage HSRT’s portfolio.
The Hartford Short Duration ETF will try to provide current income and long-term total return. The portfolio will typically invests in bonds with expected lower sensitivity to changes in interest rates. The ETF will normally include investment-grade securities that Wellington Management Company LLP considers to be attractive giving consideration to both yield and total return.
Additionally, HSRT may include up to 35% of net assets in non-investment-grade debt and 35% of its net assets in bank loans or loan participation interests in secured or unsecured variable, fixed or floating rate loans to U.S. and foreign corporations, partnerships and other entities, or so-called bank loans.
Specifically, the portfolio may consist of securities issued or guaranteed as to principal or interest by the U.S. Government, its agencies or instrumentalities; non-convertible and convertible debt securities issued or guaranteed by U.S. corporations or other issuers (including foreign issuers); asset-backed and mortgage-related securities, including collateralized mortgage obligations; securities and loans issued or guaranteed as to principal or interest by a foreign issuer, including supranational entities such as development banks, non-U.S. corporations, banks or bank holding companies, or other foreign issuers; commercial mortgage-backed securities; zero coupon securities; fixed income related derivatives; and Bank Loans, according to a prospectus sheet.
HSRT will also maintain a dollar-weighted average
HRST will also maintain a dollar-weighted average duration of less than three years.
“Our clients are looking in their fixed-income solutions for both current income and long-term total return,” Thomas McConnell, Hartford’s head of product innovation and implementation, told ETF.com. “With interest rates rising, we see demand growing for lower-duration strategies, where you’re going to get that natural, more frequent reinvestment.”
“We feel strongly that an active strategy that allows for portfolio duration to be adjusted is an even more effective means by which to manage interest rate risk,” McConnell added.
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