A new long/short equity fund from Hartford becomes the thirteenth new fund to enter the category this year, and for this fund, Hartford has partnered with Wellington Management to sub-advise the fund. The Hartford Long/Short Global Equity Fund (HLOIX) debuted on August 29 and is designed to provide investors with long-term capital appreciation.
A Focus on Global Small Cap
Employing a global long/short equity strategy, Hartford’s new fund establishes both long and short positions in global equities and equity-like securities, across market capitalizations but with a definite preference for small caps. Wellington Management, the fund’s sub-advisor, selects investments for the fund by employing fundamental analysis, quantitative research, and macroeconomic research. Wellington establishes short positions for the fund based on a quantitative investment model designed to identify stocks likely to underperform the MSCI All Country World Small Cap Index.
The Hartford Long/Short Global Equity Fund is designed to have typical net long exposure of 50-70%, with typical gross long exposure of 110-130%, but not exceeding 200%. The fund’s gross short exposure is targeted at 50% of its gross long exposure, although the prospectus says it could vary based on market movements or the sub-advisor’s view of market conditions. The management fee for the fund is 1.40%, and available share classes include A, C, I and Y.
Kenneth Abrams and Donald Tunnell are the fund’s portfolio managers. Mr. Abrams is a senior vice-president and portfolio manager at Wellington; Mr. Tunnell is a vice-president and co-director of qualitative investments.
The fund’s page at the Hartford Funds website says its hedged-equity strategy is designed to decrease the fund’s sensitivity to stock-market volatility while still providing the potential for alpha. This potential is based on the fund managers’ belief that the global small-cap equity markets are inefficient, as market inefficiency provides opportunities for both long and short positions for the portfolio.
Wellington and Long/Short Equity
The Hartford Long/Short Global Equity Fund isn’t the only long/short equity fund to tap Wellington Management for sub-advisory duties this year. Late last year, John Hancock launched its Seaport Fund (JSFBX), which is also sub-advised by Wellington. Year-to-date, that fund had returned 0.2%, as of September 3, which ranks it in the bottom 20% of Morningstar’s long/short equity category.