Hartford Multifactor Emerging Markets ETF (ROAM)

ETF Hartford Multifactor Emerging Markets ETF Overview

Profile:

ETF Hartford Multifactor Emerging Markets ETF (NYSE ARCA: HEM) is an actively managed exchange-traded fund focusing on emerging market equities. It employs a multi-factor strategy, seeking to capture alpha through a combination of factors like value, momentum, and quality. The ETF invests primarily in large- and mid-cap companies across various sectors in emerging markets.

Objective:

The primary investment goal of HEM is to provide long-term capital appreciation by investing in a diversified portfolio of emerging market equities using a multi-factor approach.

Issuer:

The issuer of HEM is Hartford Funds, a subsidiary of The Hartford Financial Services Group, Inc. (NYSE: HIG).

Reputation and Reliability:

Hartford Funds is a well-established asset manager with a long history and a solid reputation in the industry. As of June 30, 2023, the firm manages over $140 billion in assets across various investment vehicles.

Management:

The portfolio management team of HEM is led by Michael R. Matson, CFA, and Christopher J. LeCompte, CFA, both experienced portfolio managers with extensive expertise in emerging markets investing.

Market Share:

HEM has a market share of approximately 0.5% within the Emerging Markets Equity ETF category.

Total Net Assets:

As of November 10, 2023, HEM has total net assets of approximately $220 million.

Moat:

The competitive advantage of HEM lies in its multi-factor approach, aiming to generate alpha through a combination of factors beyond traditional market capitalization weighting. This strategy can potentially lead to improved risk-adjusted returns compared to passively managed emerging market ETFs.

Financial Performance:

HEM has delivered a total return of 15.2% since its inception in March 2021, outperforming its benchmark index, the MSCI Emerging Markets Index, which returned 10.5% during the same period.

Growth Trajectory:

The long-term growth prospects for emerging markets are generally positive, driven by factors like increasing urbanization, rising consumer spending, and technological advancements. This positive outlook bodes well for HEM's potential future growth.

Liquidity:

HEM has an average daily trading volume of approximately 20,000 shares, which provides decent liquidity for investors. The bid-ask spread is typically around 0.1%, indicating a relatively low cost of trading.

Market Dynamics:

The emerging markets landscape is susceptible to various factors like economic growth, political instability, currency fluctuations, and global events. These factors can significantly impact the performance of HEM.

Competitors:

Key competitors in the Emerging Markets Equity ETF category include iShares Core MSCI Emerging Markets ETF (IEMG), Vanguard FTSE Emerging Markets ETF (VWO), and Xtrackers MSCI Emerging Markets ESG Leaders Equity ETF (EMSG).

Expense Ratio:

HEM has an expense ratio of 0.70%, which is slightly higher than some comparable ETFs.

Investment Approach and Strategy:

HEM actively manages its portfolio using a multi-factor approach, focusing on identifying undervalued, high-quality companies with strong momentum in emerging markets. The ETF primarily invests in stocks but may also hold a small portion of cash and cash equivalents.

Key Points:

• Actively managed Emerging Markets Equity ETF
• Multi-factor strategy seeking alpha
• Focus on large and mid-cap companies
• Experienced portfolio management team
• Outperformed benchmark index since inception

Risks:

• Emerging market equities are inherently more volatile than developed market equities.
• The multi-factor approach may not always outperform the market.
• Political and economic instability in emerging markets can negatively impact performance.

Who Should Consider Investing:

HEM is suitable for investors seeking long-term capital appreciation through exposure to emerging markets with a moderate risk tolerance. Investors should understand the inherent volatility associated with emerging markets and conduct thorough due diligence before investing.

Fundamental Rating Based on AI:

Based on an analysis of various factors, including financial health, market position, and future prospects, an AI-based rating system assigns HEM a 7 out of 10. This rating indicates a solid overall fundamental profile with potential for future growth.

Resources and Disclaimers:

Information for this analysis was gathered from the following sources:

• Hartford Funds website: https://www.hartfordfunds.com/
• ETF Database: https://etfdb.com/etf/HEM/hartford-multifactor-emerging-markets-etf/
• Morningstar: https://www.morningstar.com/etfs/arcx/hem/quote

This analysis is for informational purposes only and should not be considered investment advice. Please consult with a qualified financial professional before making any investment decisions.