The Hartford Enters Active ETF Arena

The Hartford Financial Services Group, Connecticut based company with over $380 billion in assets, has filed with the SEC for exemptive relief to launch actively-managed ETFs through a newly formed “The Hartford Active Exchange-Traded Fund Trust”. The proposed funds will be sub-advised by Hartford Investment Financial Services, which currently has $45 billion in assets under management.

The Hartford is seeking relief for actively-managed ETFs that may also invest in other ETFs, thereby creating a fund-of-funds structure. While the relief has been sought for funds that may invest in equities or fixed-income securities, both in the US and markets, the initial fund will invest primarily in US dollar and non-US dollar denominated investment grade debt. The securities may be issues from both developed and emerging markets and of any maturity. The filing though clearly points out that the proposed funds will not invest in any derivatives such as swaps, options and futures. This last caveat has been a common feature of many recent filings for Active ETFs that are attempting to avoid additional scrutiny resulting from the SEC’s ongoing investigation into derivative usage in ETFs.

The Hartford currently has an array of mutual fund across various asset classes that it offers to investors and in July announced fee reductions on 36 of its mutual funds, in an attempt to make them more competitive within their Morningstar categories. The move to enter Active ETFs is likely part of a larger push to address advisor demands for lower expenses and fee transparency.

There are now numerous well-known mutual fund shops, such as Legg Mason, Eaton Vance, T. Rowe Price and John C. Hancock that have filings to launch actively-managed ETFs which are backlogged with the SEC. However, very few of those proposed Active ETFs have made it out the other end and launched on the market, giving the impression that the SEC is now the biggest hurdle in getting these products out to market. The SEC launched its investigation back in March 2010 and since then new launches of Active ETFs have slowed down to a trickle, even as the filings continue to pile up.

Written By Shishir Nigam from ActiveETFs | InFocus

Shishir Nigam is the founder of ActiveETFs | InFocus (http://www.etfshub.com/), which provides extensive coverage and analysis of actively-managed ETFs in US and Canada, including debates on major industry trends, insights on the latest product launches from issuers in the Active ETF space as well as in-depth interviews with industry executives and thought leaders.

Disclosure: No positions in above-mentioned names.
 
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