1. Lower Valuations

Because where you start matters in investing, ROUS emphasizes stocks with lower valuations than the Russell 1000 Index. As of 6/30/24, the current price-to-earnings ratio for ROUS was 20.0x vs. 26.5x for the Russell 1000 Index, a discount of 25%; the 3-year average discount was 20%. 

The Fund’s underlying index screens stocks based on a composite factor score that puts the most emphasis on value (50%), but also includes momentum (30%), and quality (20%). This can help include high-quality stocks with solid fundamentals while helping to avoid value traps.

 

Figure 1

ROUS Emphasizes Value Without Sacrificing Fundamentals 
Price-to-Earnings ROUS vs. Russell 1000 Index

2021 YTD Total Return Bar Chart

As of 6/30/24. Indices are unmanaged and not available for direct investment. Source: FactSet, 7/24.

 

2. Lower Volatility 

Capturing growth also means seeking to control risk. As part of its portfolio-construction process, ROUS employs a covariance-optimization tool to assemble and weight companies. The process combines companies with favorable factor scores in a way that allows them to behave independently. By applying this process to high-quality companies, the strategy seeks to reduce volatility by up to 15% over a full market cycle without sacrificing fundamentals. 

The effects of this process are visible at the holdings level: More than three-quarters of the companies ROUS invests in are less volatile than the broad market (FIGURE 2). Since the ETF began incorporating its volatility-reduction focus in 2019, ROUS has achieved a beta of 0.93 as of 6/30/24.1

 

Figure 2

ROUS Is Mainly Invested in Lower-Volatility Companies 
Percentage of Portfolio Holdings by Beta

2021 YTD Total Return Bar Chart

Chart data as of 9/11/19–6/30/24. The ETF added a volatility reduction focus on 9/11/19. Individual holdings beta calculated relative to the Russell 1000 Index. A company with a beta of 1 is as volatile as the market, a company with a beta below 1 is less volatile than the market, and a company with a beta above 1 is more volatile than the market. Sources: FactSet and Hartford Funds, 7/24.

ROUS' greater market-cap diversification against the broad market can provide two advantages: 1) more exposure to midcaps and 2) less exposure to mega-cap stocks.

 

3. Lower Concentration 

ROUS is more diversified across companies, sectors, and market cap than the Russell 1000 Index. The ETF doesn’t take big bets; in fact, no single stock can represent more than 1.5% of the portfolio at purchase (FIGURE 3). Unlike the Russell 1000 Index, of which the top-10 holdings comprise 34% of the Index, the top-10 holdings in ROUS account for only 12% of the portfolio as of 6/30/24.

The ETF’s greater market-cap diversification against the broad market can provide two advantages: 1) more exposure to midcaps and 2) less exposure to mega-cap stocks.2

 

Figure 3

ROUS Doesn’t Take Big Bets 
Top-10 Stock Weightings, ROUS vs. Russell 1000 Index 

2021 YTD Total Return Bar Chart

As of 6/30/24. Source: Hartford Funds.

 

2021 YTD Total Return Bar Chart

 

Why Value—and ROUS—Now?
Today’s investors are facing high interest rates and continued volatility. And though inflation has eased, it’s still likely to run higher than it has during the last few decades. From a historical standpoint, value has tended to perform well during periods of high inflation. And with continued volatility on the horizon, ROUS’ volatility-reduction goal of up to 15% over a complete market cycle may help mitigate some of the market’s swings.

In short, ROUS may be a good fit for investors who aren’t sure where the market is headed next but want to be prepared regardless. And with an expense ratio of just 0.19%, it’s a cost-effective way to access quality, defensive-value US equities. 

 

For more information on ROUS, talk to your Hartford Funds representative.

OVERALL
(as of 3/31/2025)
Overall, 4 stars, 3-Year, 4 stars, 5-Year, 3 stars, and 10-Year, 4 stars, rated against 1092, 1092, 1030 and 808 products, respectively. Morningstar RatingTM is calculated for products with at least a 3-year history, based on a risk-adjusted return measure (excluding any applicable sale charges) and accounts for variations in a product's monthly performance. 5 stars are assigned to the top 10%; 4 stars to the next 22.5%, 3 stars to the next 35%, 2 stars to the next 22.5% and 1 star to the bottom 10%. ETFs and mutual funds are considered a single population. The Overall Rating is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. For more information about these ratings, including their methodology, please go to global.morningstar.com/managerdisclosures . Ratings for other share classes may vary and are subject to change monthly. Past performance is no guarantee of future performance.
©2025 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/ or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.

1092 Products | Large Value Category
Based on Risk-Adjusted Returns
Silver Medalist rating
PERFORMANCE %
 
CUMULATIVE %
(as of 3/31/2025)
AVERAGE ANNUAL TOTAL RETURNS %
(as of 3/31/2025)
YTD 1YR 3YR 5YR 10YR SI 1
Hartford Multifactor US Equity ETF (ROUS, NAV) 0.11 7.11 8.39 16.39 9.44 9.31
Hartford Multifactor US Equity ETF (ROUS, Market Price) 0.07 7.14 8.39 16.40 9.42 9.30
Underlying Index (Hartford Multifactor Large Cap Index - LROLCX) 0.16 7.25 8.50 16.55 --- ---
Reference Index -4.49 7.82 8.65 18.47 12.18 ---
Morningstar Large Value Category 1.49 6.62 6.86 16.55 8.91 ---
 
CUMULATIVE %
(as of 3/31/2025)
AVERAGE ANNUAL TOTAL RETURNS %
(as of 3/31/2025)
YTD 1YR 3YR 5YR 10YR SI1
Hartford Multifactor US Equity ETF (ROUS, NAV) 0.11 7.11 8.39 16.39 9.44 9.31
Hartford Multifactor US Equity ETF (ROUS, Market Price) 0.07 7.14 8.39 16.40 9.42 9.30
Underlying Index (Hartford Multifactor Large Cap Index - LROLCX) 0.16 7.25 8.50 16.55 --- ---
Reference Index -4.49 7.82 8.65 18.47 12.18 ---
Morningstar Large Value Category 1.49 6.62 6.86 16.55 8.91 ---

SI = Since Inception. Fund Inception: 02/25/2015

Total Operating Expenses: 0.19%

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
Index performance returns do not reflect any management fees, transaction costs, or expenses.

Effective 9/11/19, the Fund's custom underlying index changed from the Hartford Risk-Optimized Multifactor US Equity Index ("US Equity Index") to Hartford Multifactor Large Cap Index ("Large Cap Index"). The Hartford Multifactor Large Cap Spliced Index reflects the performance of the US Equity Index through 9/11/19 and the performance of the Large Cap Index thereafter. The Fund’s performance and historical returns shown for the periods prior to 9/11/19 are not necessarily indicative of the performance that the Fund would have generated based on its current custom underlying index.

ETF shares are bought and sold at market price, not net asset value (NAV). Total returns are calculated using the daily 4:00 p.m. Eastern Time NAV. Market price returns reflect the midpoint of the bid/ask spread as of the close of trading on the exchange where Fund shares are listed. Market price returns do not represent the returns an investor would receive if they traded shares at other times. Brokerage commissions apply and will reduce returns.

 

Since the ETF’s index change on 9/11/2019. The Fund’s custom underlying index changed from the Hartford Risk-Optimized Multifactor US Equity Index (“US Equity Index”) to Hartford Multifactor Large Cap Index (“Large Cap Index”).
2 As of 6/30/24: Mid-cap exposure: ROUS 15.1%, Russell 1000 Index 3.9%. >$100 billion exposure: ROUS 38.0%, Russell 1000 Index 66.1%. 

*Analyst-Driven: 100%. Data Coverage: 100%. The Morningstar Medalist Rating™ is the summary expression of Morningstar’s forward-looking analysis using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which funds Morningstar believes are likely to outperform a relevant index or peer group average on a risk adjusted basis over time. Funds are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for the Medalist Rating they’re assigned. Pillar ratings (Low, Below Average, Average, Above Average, and High) may be evaluated via an analyst’s qualitative assessment (Analyst-Driven %) or using algorithmic techniques (Data Coverage %). Funds are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a fund, the rating is monitored and reevaluated at least every 14 months. When a fund is covered either indirectly by analysts or by algorithm, the rating is assigned monthly. For more detailed information, including their methodology, please go to global.morningstar.com/manager disclosures/. Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. They (i) should not be used as the sole basis in evaluating a fund, (ii) involve unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an off er or solicitation to buy or sell a fund. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate. ©2024 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/ or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.