As U.S. Treasury yields decline, investors may want to consider a defensive value equity allocation.
Many investors limited their equity exposure in recent months, comfortable with the yields offered by fixed income investments and looking to minimize downside risk. However, with the two-year yield falling about 10 basis points today and reaching its lowest level in months, now may be an opportune time for investors to consider a defensive value ETF.
The Hartford Multifactor US Equity ETF (ROUS ) allows investors to participate in the U.S. equity market, maintaining upside potential, while limiting downside risk. ROUS can enable investors to maintain target equity exposure more comfortably during choppy markets.
ROUS takes a multifactor approach to value investing. The Hartford Funds’ ETF seeks to target desired return-enhancing factors as well as to reduce exposure to unrewarded risk exposures.
Notably, ROUS seeks to outperform traditional cap-weighted indexes and reduce volatility by 15% over a full market cycle. The multifactor ETF reduces concentration risk at the sector, market cap, and individual holding levels.
See more: Why It’s Important to Mitigate Concentration Risk
ROUS charges just 19 basis points, making it cost-efficient and suitable for a core equity allocation.
How Defensive Value ETF 'ROUS' Compares to the Competition
As ROUS aims to outperform the benchmark Russell 1000 Value, it’s fair to see how the multifactor ETF stacks up against the iShares Russell 1000 Value ETF (IWD ).
ROUS has demonstrated its ability to outperform IWD during various market environments. The Hartford Funds’ ETF is up 9.6% year to date as of November 27, outpacing IWD by 527 basis points.
November to date, as the broader market rallies, ROUS is up 6.2% while IWD is up 5.9%, highlighting the multifactor ETF’s ability to participate in the market upside.
Conversely, during October, a month characterized by volatility and drawdowns, ROUS limited losses to -2.0% while IWD dropped -3.6%.
For more news, information, and analysis, visit the Multifactor Channel.
Investing involves risk, including the possible loss of principal.
This article was prepared as part of Hartford Funds paid sponsorship with VettaFi. Hartford Funds is not affiliated with VettaFi and was not involved in drafting this article. The opinions and forecasts expressed are solely those of VettaFi. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, a recommendation for any product or as investment advice.
