Hartford International Value Fund Commentary – Q1 2021
Thesis
Serving as a satellite holding, HILIX is a value style fund that takes advantage names that have underperformed recently and are cheaply priced. The team generates alpha by finding companies with strong fundamentals that are overlooked during times of low consensus expectations. We like that HILIX takes advantage of extremes and gains exposure to less efficient market caps by having more holdings and moderate active bets.
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Overview
In the first quarter of 2021, HILIX outperformed the benchmark (MSCI EFEA Index) by 832bps due mainly to strong security selection in Financials, Industrials, and Information Technology. This was slightly offset by selection in Materials. An underweight to Consumer Staples, Utilities, and Healthcare contributed to returns while an underweight to Financials detracted. Stock selection within Developed Europe and Middle East ex-UK and Japan were strong contributors to overall performers as well.
Q1 2021 Summary
- HILIX returned 11.80%, while the MSCI EAFE Index returned 3.48%
- Top issuer contributors
- Novartis – not owning
- Unilever – not owning
- Top issuer detractors
- Volkswagen – not owning
- Dongfeng Motor Group – general allocation
Outlook
- We continue to hold this fund and believe in our thesis due to the fund’s value and bottom-up, fundamental approach
- The fund saw heavy underperformance during most of 2020, but has since began to rally back in Q4 2020 and Q1 2021 as the “value” style continues to rebound
- High excess savings and household net worth, along with higher expected inflation and corporate profits are all catalysts to support value stocks
- Seeing opportunity in defensive areas: Healthcare and Telecoms
- Continue to have largest overweight to Energy, Industrials, and Communication Services and underweight to Consumer Staples and Utilities
- Overweight to EM and underweight to Europe and Asia Pacific ex-Japan
- Value has been underperforming for some time, yet historically it has proven to outperform through full market cycles
[Category Mutual Fund Commentary]
Micah Weinstein
Research Analyst
Direct: 617.226.0032
Fax: 617.523.8118
Crestwood Advisors
One Liberty Square
Suite 500
Boston, MA 02109