LVIN, LVUS: new Low Volatility Multifactor ETFs launched by Hartford

Hartford Funds, begun trading two Low Volatility Multifactor ETFs, the Hartford Multifactor Low Volatility International Equity ETF (Bats: LVIN) and the Hartford Multifactor Low Volatility US Equity ETF (Bats: LVUS)  on Thursday, May 11, 2017. Here is a synopsis of the new ETFs:

 

1.
FUND INFORMATION:

Symbol: LVIN   Exchange: BATS
Name: Hartford Multifactor Low Volatility International Equity ETF Net Expense Ratio: 0.39%

 

FUND OBJECTIVE:
The Hartford Multifactor Low Volatility International Equity ETF seeks to provide investment results that, before fees and expenses, correspond to the total return performance of the Hartford Multi factor Low Volatility International Equity Index (LLVINX).

REFERENCE INDEX:
The Hartford Multi factor Low Volatility International Equity Index is designed to outperform a capitalization-weighted universe of developed and emerging markets located outside the U.S. with up to one quarter less volatility over a complete market cycle. The Index methodology seeks to construct a portfolio comprised of equity securities with low volatility characteristics, while seeking to account for potentially uncontrolled risks that may result from a singular emphasis on low volatility stocks. The Index methodology first selects equity securities with low volatility characteristics from abroad universe of equity securities in developed (excluding the U.S.) and emerging economies. Each equity security must be with in the top 85 per cent of the applicable country’s market capitalization with an average daily trading volume with an equivalent value to $1million. As of March9,2017, the approximate market capitalization range of components of the Index was $300 million to $270 billion. The composition of the Index is further refined by an optimization process that seeks diversification by applying minimum and maximum weightings of equity securities across a variety of measures, including country, sector, company, size, and other factors.
The optimization process also seeks to avoid unintended factor risks by maintaining neutral to positive exposure to other potentially return-enhancing factors such as value, momentum, and quality at the portfolio level. The Index seeks to balance risk across sectors by utilizing expected tail loss estimations, which is a process that seeks to assign weights so that each sector contributes equal risk to the overall portfolio versus having significant concentrations in particular sectors. Sectors exhibiting higher historical risk are assigned lower weightings while those with lower historical risk are assigned higher weightings. Expected tail loss is an estimation process that seeks to measure potential loss during turbulent markets and is based on the relative historical performance of each sector. The Index methodology’s pursuit of neutral to positive exposure to value, momentum, and quality characteristics at the aggregate Index level reflects the belief that unintended, negative exposure to anyone of these factors may introduce unintentional risk. The selection and optimization process seeks to emphasize low volatility equity securities that also exhibit a favorable combination of these additional factors, which are measured by characteristics such as a company’s earnings, operating cash flow, and revenue-to-enterprise value, book value, dividend yield and earnings yield (to indicate value), historical monthly returns (to indicate momentum),and gross profitability divided by a company’s total assets (to indicate quality). The Index
components are risk-and factor-adjusted twice annually, with reconstitution occurring the second Wednesday in both March and September. The Index was established with a base value of 1,000 on December31, 2016.
The components of the Index may range from 100 to 1,000, and the degree to which these components represent certain industries, may change over time.

Top 10 Holdings (05/26/17):

Country Garden Holdings Co 0.74%
Aselsan Elektronik Sanayi 0.67%
Vtech Holdings Ltd 0.66%
Lf Corp 0.65%
Biomerieux 0.65%
Softbank Group Corp 0.63%
Kagome Co Ltd 0.63%
Takeda Pharmaceutical Co Ltd 0.61%
Orion Oyj Class B 0.61%
Recordati Spa 0.60%

 

 

Useful Links:
LVIN Home Page

 

 

2.
FUND INFORMATION:

Symbol: LVUS Exchange: BATS
Name: Hartford Multifactor Low Volatility US Equity ETF Net Expense Ratio: 0.29%

 

FUND OBJECTIVE:
The Hartford Multifactor Low Volatility US Equity ETF seeks to track the investment results of the Hartford Multifactor Low Volatility US Equity Index (LLVUSX).

REFERENCE INDEX:
The Hartford Multifactor Low Volatility US Equity Index is designed to outperform a U.S. capitalization-weighted universe with up to one quarter less volatility over a complete market cycle.
The Index methodology seeks to construct a portfolio comprised of equity securities with low volatility characteristics, while seeking to account for potentially uncontrolled risks that may result from a singular emphasis on low volatility stocks. The Index methodology first selects equity securities with low volatility characteristics from a broad universe of U.S. equity securities. Each equity security must be within the top 98 percent of U.S. market capitalization with an average daily trading volume with an equivalent value to $1 million. As of March 9, 2017, the approximate market capitalization range of components of the Index was $500 million to $500 billion.

The composition of the Index is further refined by an optimization process that seeks diversification by applying minimum and maximum weightings of equity securities across a variety of measures, including sector, company, size, and other factors. The optimization process also seeks to avoid unintended factor risks by maintaining neutral to positive exposure to other potentially return-enhancing factors such as value, momentum, and quality at the portfolio level. The Index seeks to balance risk across sectors by utilizing expected tail loss estimations, which is a process that seeks to assign weights so that each sector contributes equal risk to the overall portfolio versus having significant concentrations in particular sectors. Sectors exhibiting higher historical risk are assigned lower weightings while those with lower historical risk are assigned higher weightings. Expected tail loss is an estimation process that seeks to measure potential loss during turbulent markets and is based on the relative historical performance of each sector.
The Index methodology’s pursuit of neutral to positive exposure to value, momentum, and quality characteristics at the aggregate Index level reflects the belief that unintended, negative exposure to any one of these factors may introduce unintended risk. The selection and optimization process seeks to emphasize low volatility equity securities that also exhibit a favorable combination of these additional factors, which are measured by characteristics such as a company’s earnings, operating cash flow, and revenue-to-enterprise value, book value, dividend yield and earnings yield (to indicate value), historical monthly returns (to indicate momentum), and gross profitability divided by a
company’s total assets (to indicate quality).
The Index components are risk- and factor-adjusted twice annually, with reconstitution occurring the second Wednesday in both March and September. The Index was established with a base value of 1,000 on December 31, 2016. The components of the Index may range from 100 to 750, and the degree to which these components represent certain industries, may change over time.

 

Top 10 Holdings (05/26/17):

Mcdonald S Corp 1.68%
Unitedhealth Group Inc 1.64%
Time Warner Inc 1.54%
Johnson + Johnson 1.47%
Chevron Corp 1.42%
United Parcel Service 1.42%
Exxon Mobil Corp 1.39%
At+t Inc 1.37%
Intl Business Machines Corp 1.30%
Verizon Communications Inc 1.25%

 

 

Useful Links:
LVUS Home Page

ETFtrack comment:
Here is a comment from Darek Wojnar, Head of ETFs at Hartford Funds:
“These strategies arrive at a time when market volatility is top-of-mind for investors. They were designed to reduce volatility for investors pursuing long-term growth potential while introducing positive exposure to other potentially return-enhancing factors such as value, momentum, quality and size.”

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