RODM ISSUER
The Hartford Funds Management Company, LLC is the issuer behind the Hartford Multifactor Developed Markets (ex-US) ETF (RODM). Established as a subsidiary of The Hartford Financial Services Group, Inc., Hartford Funds Management Company, LLC, manages a diverse range of investment products. The RODM ETF is designed to provide investors exposure to developed markets (ex-US) by employing a multifactor investment approach, offering an alternative approach to international equity investing.
RODM DIVIDEND
The RODM Dividend reflects the dividend distribution of the Hartford Multifactor Developed Markets (ex-US) ETF (RODM). While RODM primarily focuses on factor-based investing in developed international markets, it still offers investors access to dividends. Dividend distributions from RODM typically occur on a semi-annual basis and are subject to the individual dividend policies and performances of the underlying international companies. Investors looking for a diversified approach to international equities with the potential for some dividend income may consider RODM as a suitable option.
RODM TRACKING
The Hartford Risk-Optimized Multifactor Developed Markets (ex-US) Index ETF, abbreviated as RODM, aims to track the performance of the Hartford Risk-Optimized Multifactor Developed Markets (ex-US) Index (LRODMX), before accounting for fees and expenses. The Index is designed to enhance returns and manage risks in developed markets outside the United States by focusing on a strategic combination of factors such as valuation, momentum, and quality in selecting equity securities. The Index aims to outperform a standard capitalization-weighted portfolio of companies in developed markets, specifically in Europe, Canada, and the Pacific Region, over a complete market cycle. It seeks to achieve this with up to 15% less volatility through its unique index construction process, which is not synonymous with lower risk but rather implies a strategic reallocation of specific risk factors. Lattice Strategies LLC, the adviser behind the Index, employs a risk-optimized approach to address potential risks within its asset class, such as country and company concentration, currency risks, and valuation sensitivity. The Index is constructed using a proprietary, rules-based methodology that emphasizes a multi-layered, risk-controlled strategy, de-concentrating risks associated with individual countries and currencies, and prioritizing companies that consistently demonstrate favorable risk premium factors. The Index undergoes a bi-annual adjustment for risk and factor considerations, with reconstitution and rebalancing in March and September. Since its inception on December 31, 2013, the Index typically includes 300-400 components, though this can vary over time along with the industries these components represent. RODM employs a passive investment strategy, aiming to replicate the performance of its underlying Index without attempting to outperform it or take defensive positions in declining or overvalued markets. This passive approach is intended to result in lower costs and improved after-tax performance compared to actively managed funds, partly due to reduced portfolio turnover. The fund invests at least 80% of its assets in securities from the Index or in depositary receipts representing those securities. It may allocate the remainder to derivatives not in the Index, cash or cash equivalents, and other securities believed to aid in tracking the Index's performance. The fund's investment in a particular industry or group of industries will mirror the Index's concentration in those sectors.
RODM CORRELATION
The concept of correlation is central to the investment strategy of the Hartford Risk-Optimized Multifactor Developed Markets (ex-US) Index (RODM). Correlation, in financial terms, measures the degree to which two securities move in relation to each other. In the context of RODM, the strategic selection of equity securities based on factors such as valuation, momentum, and quality is influenced by the understanding of how these factors correlate with each other and with the overall market performance. By analyzing these correlations, RODM aims to construct a portfolio that captures favorable investment opportunities while managing the inherent risks. For instance, by de-concentrating risks associated with individual countries and currencies, the index seeks to reduce the impact of negative correlations that could lead to underperformance in certain market conditions. Moreover, the bi-annual adjustment of the index components based on risk and factor correlations ensures that the portfolio remains optimized to achieve its objective of lower volatility and enhanced returns in comparison to a capitalization-weighted benchmark. This careful consideration of correlations is a cornerstone of the risk-optimized approach that RODM employs to navigate the complexities of international equity markets.
RODM SECTOR
The Hartford Risk-Optimized Multifactor Developed Markets (ex-US) Index (RODM) strategically navigates the sectoral landscape of developed international equity markets, ensuring a well-balanced exposure across various sectors. By employing a multifactor approach that emphasizes valuation, momentum, and quality, the Index aims to select companies that not only demonstrate strong fundamentals but also offer a diversified sector representation. This approach mitigates sector-specific risks and enhances the potential for stable returns. For example, during periods of economic growth, sectors such as technology and consumer discretionary might perform well and be more heavily weighted in the Index. Conversely, in times of economic uncertainty, more weight might be given to traditionally defensive sectors like healthcare and utilities, known for their resilience. This dynamic allocation allows the RODM to adapt to changing market conditions, maintaining a balanced exposure across sectors that can contribute to its goal of achieving reduced volatility and improved performance relative to a capitalization-weighted benchmark of major developed markets outside the U.S. The Index's rules-based, proprietary methodology ensures that its sector composition is regularly reviewed and adjusted in line with its bi-annual rebalancing schedule, reflecting the ongoing changes in the market and economic environment.
RODM EXPOSURE
The Hartford Risk-Optimized Multifactor Developed Markets (ex-US) Index (RODM) provides investors with exposure to a diversified portfolio of equity securities from developed international markets outside the United States. This exposure is carefully constructed to capture opportunities while managing risks associated with factors such as country, company, and currency concentrations. RODM's approach seeks to optimize exposure to factors such as valuation, momentum, and quality, which are believed to drive returns over the long term. By emphasizing companies that exhibit persistent risk premium factors, RODM aims to outperform a capitalization-weighted universe of companies in major developed markets while targeting up to 15% less volatility. Furthermore, the Index employs a risk-controlled methodology to de-concentrate individual country and currency risks, enhancing diversification benefits for investors. RODM's sectoral exposure is also managed dynamically, ensuring a balanced representation across various sectors to mitigate sector-specific risks and capitalize on opportunities arising from different economic conditions. Overall, RODM offers investors a strategic and diversified exposure to developed international markets, aiming to achieve improved risk-adjusted returns over a complete market cycle.
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