Hartford Funds is expanding its suite of Lattice exchange traded fund strategies to help investors enhance portfolios and diminish volatility or drawdown risks to potentially improve total risk-adjusted returns.
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Hartford Funds recently came out with the Lattice Real Estate Strategy ETF (NYSEArca: RORE), a multi-factor, smart-beta ETF based on a combination of factors, like quality, momentum and value, that tries to deliver competitive yield and improved return potential in U.S. real estate investment trusts.
“This was a very timely effort. Demand for REITs are increasing as there’s an increased demand for diversified yield,” Darek Wojnar, Head of ETFs at Hartford Funds, told ETF Trends in a call.
Wojnar explained that RORE provides an attractive alternative to traditional market cap-weighted exposure, which may cause investors to be overweight the largest or most overvalued companies in the space. Alternatively, the smart-beta REITs ETF focuses on quality and momentum to provide a more diversified approach to the sector. The REIT ETF also minimizes exposure to holdings, so it is less top heavy with a 20% tilt toward the top 10 positions.
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RORE is the first of potentially many more smart-beta ETFs after Hartford Funds acquired Lattice. Hartford Funds first announced its acquisition of Lattice in May, but the deal was not finalized until the third quarter. Hartford’s purchase of Lattice “builds on Hartford Funds’ active management platform and creates nimble in-house investment and product development capabilities for future ETF strategies.”
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RORE joins the Lattice suite of ETFs, which includes four other smart-beta strategies: the Lattice Emerging Market Strategy ETF (NYSEArca: ROAM), Lattice Developed Markets (ex-US) Strategy ETF (NYSEArca: RODM), Lattice US Equity Strategy ETF (NYSEArca: ROUS) and Lattice Global Small Cap Strategy ETF (NYSEArca: ROGS). Like RORE, the other four Lattice ETFs screen components for factors like quality, momentum and value for more favorable risk-adjusted returns.
“Factor criteria is more appropriate for the industry. It is important to consider how value and quality can affect returns,” Wojnar added.
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