Hartford Multifactor US Equity ETF (ROUS)
AI Summary
The Fund aims to track the Hartford Multifactor Large Cap Index, which seeks to enhance returns and reduce volatility by up to 15% compared to a cap-weighted universe over a full market cycle. The index uses a rules-based, proprietary methodology with multi-factor stock selection and a comprehensive risk framework. It applies an optimization process to achieve desired characteristics like reduced volatility, sector/size constraints, and positive factor exposures to value, momentum, and quality.
The Fund takes a passive, indexing approach, investing at least 80% of assets in index securities and depositary receipts. It can invest the remainder in other instruments to help track the index. The index is reconstituted and rebalanced semi-annually, typically holding 300-400 large-cap U.S. stocks. Its unique methodology aims to address risks like concentrations and valuation insensitivity through the indexing process.
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 Large Cap Index (LROLCX) (the Index), which seeks to enhance the return potential available from investment in the initial capitalization-weighted universe 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 methodology seeks to enhance return potential through multifactor stock selection while applying a comprehensive risk framework to overall Index construction. The rules-based, proprietary methodology uses an optimization process to help achieve the desired composition and targeted characteristics, including reduced volatility, relative sector and size constraints, and positive value, momentum, and quality relative factor scores at the portfolio level. 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. The Index is comprised of large capitalization securities, which are defined as securities included among the 1,000 largest U.S. companies by estimated free-float market capitalization. The capitalization range of the Index was $99 million to $2.9 trillion as of December 31, 2023. 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, country, company, and currency 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. 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 securities of the Index and in depositary receipts representing securities of the Index. The Fund may invest the remainder of its assets in certain instruments that are not 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.