Hartford Multifactor Diversified International ETF (RODE)
AI Summary
The Hartford Multifactor Diversified International ETF seeks to track the performance of the Hartford Multifactor Diversified International Index (LRODEX), which is designed to enhance return potential from developed and emerging international markets while reducing volatility by up to 15% compared to a capitalization-weighted universe.
The Index employs a multi-layered, rules-based methodology that selects companies exhibiting attractive risk premium profiles, such as quality, momentum, and value factors. It manages overall volatility levels and other risks through its construction process. The Index typically includes 300-400 components, with reconstitution and rebalancing occurring semi-annually.
A unique feature of the strategy is its focus on addressing identified risks within the asset class, such as company concentrations, valuation insensitivity, and other unmanaged risk factors, through the index management process. The Fund takes a passive, indexing approach and generally invests at least 80% of its assets in the Index’s equity securities and depositary receipts.
Strategy Narrative (Prospectus)
The Fund seeks to provide investment results that, before fees and expenses, correspond to the total return performance of the Hartford Multifactor Diversified International Index (LRODEX) (the Index), which is designed to enhance return potential available from investment in a capitalization-weighted universe of developed and emerging markets located outside the U.S. The Index methodology seeks to enhance return potential available from investment in developed markets (excluding the US) and emerging market companies while reducing volatility by up to 15% compared to that of the capitalization-weighted universe over a complete market cycle through the Index construction process.The Index is built with a rules-based, proprietary methodology, which employs a multi-layered risk-controlled approach that seeks to address the risks associated with the cap-weighted universe, accounting for liquidity and volatility risks. Specifically, the Index seeks to select companies exhibiting attractive risk premium profiles, including but not limited to, quality, momentum, and value, while managing overall volatility levels and other risks. The Indexs components are adjusted twice annually, with a reconstitution and rebalance occurring in March and September. The Index was established on June 28, 2019. Each equity security must be within the top 85% of the applicable countrys estimated free float market capitalization and have an average daily trading volume with an equivalent value of $1 million or more. The Index is expected to typically include 300-400 components. The components of the Index, the number of components and the degree to which these components represent certain industries, may change over time. The Index, developed by Lattice Strategies LLC (Lattice or the Adviser), seeks to address identified risks within its asset class. For example, company concentrations, valuation insensitivity, and other unmanaged risk factors may be addressed through the index management process.The Adviser uses a passive or indexing approach to try to achieve the Funds investment objective. The Fund does not try to beat the index it tracks and does not seek temporary defensive positions when markets decline or appear overvalued. Indexing may eliminate the chance that the Fund will substantially outperform the Index but also may reduce some of the risks of active management, such as over concentration in countries and individual equities. Indexing seeks to achieve lower costs and better after-tax performance by keeping portfolio turnover low in comparison to actively managed investment companies.The Fund generally invests at least 80% of its assets in the equity securities that are components of the Index and in depositary receipts (such as American Depositary Receipts (ADRs), Global Depositary Receipts (GDRs) and European Depositary Receipts (EDRs)) representing securities of the Index. The Fund may invest the remainder of its assets in certain derivative instruments that may not be included in the Index, cash and cash equivalents, including money market funds, as well as in securities that are not included in the Index, but that the sub-adviser believes will help the Fund track the Index. To the extent that the Index concentrates (i.e., holds 25% or more of its total assets) in the securities of a particular industry or group of industries, the Fund will do so in approximately the same amount as the Index. The Fund may lend securities representing up to one-third of the value of the Funds total assets (including the value of the collateral received) in accordance with the Funds securities lending program and guidelines.The Index is sponsored by Lattice. Lattice determines the composition and relative weightings of the securities in the Index and publishes information regarding the market value of the Index. The Index is calculated and distributed by Solactive AG. Additional information on the Index can be found at hartfordfunds.com.