DJIA: The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. DJIA covers all industries with the exception of transportation and utilities.
S&P 500 Index: The S&P 500 Index is an unmanaged market capitalization-weighted index used to measure 500 companies chosen for market size, liquidity and industry grouping, among other factors.
Dividend-Paying vs. Non-Dividend-Paying Stocks: Each stock’s dividend policy is determined by its indicated annual dividend. Ned Davis Research classifies a stock as a dividend- paying stock if the company indicates that it is going to be paying a dividend within the year. A stock is classified as a non-payer if the stock’s indicated annual dividend is zero.
The index returns are calculated using monthly equal-weighted geometric averages of the total returns of all dividend-paying (or non-paying) stocks. A stock’s return is only included during the period it is a component of the S&P 500 Index. The dividend figure used to categorize the stock is the company’s indicated annual dividend, which may be different from the actual dividends paid in a particular month.Dividend-Growing, No-Change-In-Dividend, and Dividend-Cutting: Dividend Growers and Initiators include stocks that increased their dividend anytime in the last 12 months. Once an increase occurs, it remains classified as a Grower for 12 months or until another change in dividend policy. No-Change stocks are those that maintained their existing indicated annual dividend for the last 12 months (i.e., companies that have a static, non-zero dividend). Dividend Cutters and Eliminators are companies that have lowered or eliminated their dividend anytime in the last 12 months. Once a decrease occurs, it remains classified as a Cutter for 12 months or until another change in dividend policy.
You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus and summary prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus and summary prospectus by calling 888.966.9661.
This material is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy or sell securities, and is not provided in a fiduciary capacity within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with his or her advisers.
Unless otherwise stated, all information and opinions were produced by sources we believe to be accurate and are subject to change. Additional information may be required to make an informed investment decision. AAM may make a market in or have other financial interests in any given security with which this analysis suggests may be benefited from its conclusions. AAM does not offer tax advice. Past performance does not guarantee future results. Any forward looking statements are not to be considered as forecasts but rather are presented for your consideration.
Not FDIC Insured. Not Bank Guaranteed. May Lose Value.
Distributed by IMST Distributors, LLC | (866) 966-9661 | www.aamlive.com
Advisors Asset Management, Inc. (AAM) is an SEC-registered investment advisor and member FINRA/SIPC.
The performance data quoted represents past performance and is not a guarantee of future results. It is not possible to investin an index.
Dividend Payment Risk: An issuer of a security may be unwilling or unable to pay income on a security. Common stocks do not assure dividend payments and are paid only when declared by an issuer’s board of directors. The amount of any dividend may vary over time.
An investment in the Fund is subject to risks and you could lose money on your investment in the Fund. The principal risks of investing in the Fund include, but are not limited to, investing in foreign securities, investing in small-and mid-cap companies, and focused risk. The prices of foreign securities may be more volatile than the securities of U.S. issuers because of economic conditions abroad, political developments, and changes in the regulatory environment of foreign countries. Investments in small and mid-cap companies involve greater risks including increased price volatility compared to the market or larger companies. Although the Fund is diversified, the Sub-advisor intends to focus its investments in the securities of a comparatively small number of issuers. Investment in securities of a limited number of issuers exposes the Fund to greater market risk and potential losses than if its assets were diversified among the securities of a greater number of issuers. More information about these risks may be found in the Fund’s prospectus.
1 Source: Ned Davis Research. The return of the price index is referred to as capital appreciation. Income return is assumed to be the Index’s total return minus its capital appreciation. Total Return = Capital appreciation plus reinvested dividends during the time period. Time period from stats above = 12/31/1929–3/31/2018
2 Source: Ned Davis Research. Based on equal-weighted geometric average of total returns (including dividends) of dividend-paying and non-dividend-paying historical S&P 500 Stocks. Uses Indicated Annual Dividends to identify dividend- paying stocks on a rolling 12-month basis.
[Source]
Definitions:
IMPORTANT INFORMATION:
Sources and Disclosures
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For more information on the AAM/HIMCO Short Duration Fund, please contact a financial professional or complete the form below and we will be in touch shortly.
Eleanor K. Moffat
Vice President
and Principal
Charles A. Pettengill
Vice President
and Principal
Jason Celente,
Senior Portfolio Manager
Shannon Carbray, CFA**
Portfolio Manager
Robert Crusha, CFA**
Head of Money Markets/Short Duration, Senior Portfolio
Manager
the portfolio management team
About Hartford Investment Management Company (HIMCO)
Website
Fact Card
Resources
Resources
Minimum Investment (Class A/C)
$2,500 initial/$500 subsequent
Inception Date
June 30, 2014
Investment Style
Short Duration Fixed Income
Benchmark
Bloomberg 1-3 Year U.S. Government / Credit Index^
Dividend Frequency
Monthly
Overview
A balanced top-down, bottom-up approach is utilized to determine underlying relative value and identify market trends and global themes. Active management and diversification seek to mitigate volatility and
provide strong risk-adjusted returns.
Investment Objective
Current income and long-term total return
Ticker Symbols
Fund Facts
Class A: ASDAX / Class C: ASDCX / Class I: ASDIX
May work as a standalone investment or as a complement to other active and passive fixed income strategies
6/6
%
6
Integrated risk management throughout
the process
5/6
$
minimum
1B
Laddered portfolio
3/5
Short duration and weighted average
life constraints
2/5
Broad opportunity set across fixed
income sectors
1/5
Highlights of the Fund's Investment Approach
tactical trades
with
income generation
AS OF 9/30/2023
1, 2
Dividend-paying stocks declined, on average, about half as much as
non-dividend payers in bear markets from 1/31/1972-3/31/2018.
1
Dividends represented 100% of the S&P 500’s 2011 total return.
1
The 2000s (12/31/1999-12/31/2009) encompassed the bursting of the “technology-media-telecom” bubble as well as the beginning of the financial crisis. During this period, the index’s income return was positive, while its price and total return were both negative.
1
During the 1930s, which included the Great Depression, dividends represented 1,693% of the S&P 500’s total return.
1972 - 2018
2011
2000s
1930s
Historically, dividends have provided a cushion against volatility and market downturns with dividend-paying stocks tending to weather ups and downs better than non-dividend-payers.
Passively managed fixed income funds may be prone to forced selling
2
Dividend-paying stocks averaged an almost 3%
higher return per year than
non-dividend payers during
bull markets.
Higher Yearly
%
3
1
The S&P 500’s annualized
return with dividends
reinvested – compared to
5.6% without dividends
Annual return
%
9.7
1
Amount of the S&P 500
Index’s total returns
driven by dividends
%
42.0
Dividend payments can provide a strong foundation for a stock’s total return, through bull and bear markets. Dividend payments have been crucial to the S&P 500’s total return:
Market-weighted allocations often lead to concentrated portfolios
Dividends are a powerful tool
in communicating financial health to the capital markets.
Financial Strength
The ability to pay a dividend is an important indicator to investors that the company has
a proven and sustainable business model.
Business Stability
The ability to pay cash from reported earnings points to the inherent quality of those earnings.
Earnings Quality
Regular dividends that follow a defined payout ratio are a
useful proxy for management’s confidence in the business.
Earnings power
Market-cap weighted indices, by definition, grant the largest index weights to the issuers and sectors with the most debt outstanding.
Select indices may be structurally-biased toward the most indebted issuers
Passively managed fixed income funds may be prone to forced selling
Market-weighted allocations often lead to concentrated portfolios
Select indices may be structurally-biased toward the most indebted issuers
As the Federal Reserve Board raises interest rates and actively works to reduce its balance sheet, fixed income markets now face potential headwinds and we believe many investors may be unknowingly exposed to areas that can be considerably impacted by Fed policy normalization.
The Federal Reserve embarked on an aggressive tightening campaign in March 2022, which has continued into 2023. However, inflation has remained high and “stickier” than many expected. There is now speculation that the U.S. could see a recession in the second half of 2023. Geopolitical tensions remain on numerous fronts, and the next U.S. presidential election is starting to attract attention. In short, the global capital markets are dealing with significant uncertainty, and we believe it could be a good time to consider short duration fixed income.
WHY SHORT DURATION FIXED INCOME?
See how
HIMCO's investment process is designed with a goal to balance investors' need for income with seeking to reduce interest rate volatility as markets advance through an economic cycle.
Short Duration Fund
AAM/HIMCO
Ticker symbols Class A: ASDAX / Class C: ASDCX / Class I: ASDIX
CRN: 2018-0702-6743 R
Diversified Sources of Income
Aims to Reduce Volatility
Diversification
Expanded opportunity set seeks to provide enhanced yield beyond traditional short-term bonds.
Active management and diversification seek to mitigate volatility and provide strong risk-adjusted returns.
Parameters are set to potentially lower volatility that can result from moves in interest rates and credit spreads relative to traditional fixed income.
* Source: Morningstar. Index weights are represented by the iShares Core US Aggregate Bond ETF.
About the AAM/HIMCO
Short Duration Fund
Insight believes a more benchmark-agnostic approach that combines “smart” income generation with an active total return credit strategy may maximize the earnings potential of an investment grade credit portfolio over time.
Insight puts this belief into action when managing the AAM/Insight Select Income Fund. The fund is intentionally not tied to benchmark weights in an effort to provide the flexibility to potentially exploit security mispricings and market inefficiencies across global credit markets. The process combines fundamental, bottom-up credit analysis with macroeconomic perspectives to arrive at sector weighting decisions. In short, Insight looks to achieve its goals by complementing income generation with tactical trades.
4/5
Active management and diversification
13
-year
Visit AAM
Established in 1981, HIMCO is the asset management arm of the Hartford Financial Services Group, Inc. (The Hartford).
In addition to the assets managed on behalf of The Hartford, HIMCO manages assets for other institutional investors, including assets managed on a sub-advisory basis, across the global fixed income, equity and alternative markets. HIMCO's broad capability set and experienced professionals allow it to develop strategies based on individual needs while also navigating various market environments.
1/5
Extensive, highly experienced, specialized resources across all aspects of fixed income investing; research, portfolio management and operations
2/5
Aims to add value through a credit-focused security selection process, and active management of duration, yield curve, and market allocations
in assets under management
$800
lEARN MORE ABOUT himco
1 Source: Credit Suisse, Barclays Live, as of September 30, 2023. Past performance is not a guarantee of future results. Traditional Short-Term Bonds represented by the Bloomberg 1-3 Year Govt./Credit Index. Intermediate Credit represented by the Bloomberg U.S. Credit 1-5 Year Index. ABS represented by the Bloomberg ABS Index. Short Duration CMBS (Commercial Mortgage Backed Securities) represented by the Bloomberg CMBS 1-3.5 Year Index. Intermediate High Quality High Yield represented by the Bloomberg High Yield Corporate Ba/B 1-5 Year Index. High Quality Bank Loans represented by the CS Leveraged Loan BB Index. It is not possible to invest directly in an index. Investment process subject to change at any time without notice.
2 Source: eVestment, Credit Suisse, Barclays Live, as of September 30, 2023. Past performance is not a guarantee of future results. Bloomberg U.S. Treasury Index was used as a proxy for interest rates. Bloomberg 1-3 Year U.S. Govt./Credit Index used as a proxy for Short-Term Bonds. Correlation is a statistical measure of how two variables move in relation to each other with coefficients ranging from +1 to -1. A correlation coefficient of +1 implies that as one variable moves, the other will move in exact lockstep. Alternatively, a correlation coefficient of -1 implies that if one variable moves, the other moves in the same amount in the opposite direction. If the correlation is 0, the movements of the variables are completely random.
3 Short duration and weighted average life generally result in less volatility from moves in interest rates and credit spreads relative to traditional fixed income. The Weighted Average Life of the Fund is the average time to receipt of unpaid principal of each security weighted by its respective contribution to the total market value of the fund, including principal and accrued interest.
4 A laddered portfolio is a portfolio of fixed income securities of varied maturity dates. A laddered portfolio has the potential to provide cash flow for liquidity or to be reinvested in what HIMCO believes are higher income opportunities.
* Morningstar Rating is for the Class I share class only; other classes may have different performance characteristics. For the period ended 9/30/23, the AAM/HIMCO Short Duration Fund Class I shares was rated against 204 Ultrashort Bond funds over the last three years and 180 funds over the last five years. With respect to these Ultrashort Bond funds, AAM/HIMCO Short Duration Fund Class I shares received a Morningstar Rating of 3-stars for the three-year period and 4-stars for the five-year period based on risk-adjusted returns. Past performance is no guarantee of future results. Please see additional disclosure under Important Disclosures below.
** The Chartered Financial Analyst (CFA) designation is an international professional certification offered by the CFA Institute (formerly AIMR) to financial analysts who complete a series of three examinations. To become a CFA charterholder candidates must pass each of three six-hour exams, possess a bachelor’s degree from an accredited institution (or have equivalent education or work experience) and have 48 months of qualified, professional work experience. CFA charterholders are also obligated to adhere to a strict Code of Ethics and Standards governing their professional conduct.
Important Disclosures
View the AAM/HIMCO Short Duration Fund’s prospectus.
There is a 1.00% redemption fee imposed on shares if redeemed within 30 days of purchase.
Mutual fund investing involves risk, including the potential loss of principal. A significant percentage of the Fund’s assets may be below investment-grade securities (“high-yield securities” or “junk bonds”), which are rated lower because there is a greater possibility that the issuer may be unable to make its interest and principal payments, and involve risks beyond those inherent in solely higher-rated investments.
This Fund invests in bank loans, which carry credit risks of nonpayment of principal or interest and risks of bankruptcy, insolvency, illiquidity, prepayment, interest rate, recovery and valuation.
The Fund is subject to credit risk (the risk that the issuing company may not be able to pay interest and principal when due), interest rate risk (the risk that your investment may go down in value when interest rates rise), and risk of loss (the risk that you could lose money on your investment).
The Fund may invest in foreign securities, which can be riskier than investments in U.S. securities (risks may include currency risk, illiquidity risks, and risks from substantially lower trading volume on foreign markets). These risks are magnified in emerging markets.
This Fund is subject to liquidity risk because its investments may trade less frequently or are not readily marketable; this may adversely affect the Fund’s value or prevent the Fund from being able to meet cash obligations or take other investment opportunities.
The Fund invests in mortgage-backed, commercial mortgage-backed and asset-backed securities, which are subject to higher interest rate, extension and prepayment risk; the value of these investments may be reduced or become worthless if they are “subordinated” and receive interest or income payments only after other interests in the same mortgage or asset pool are satisfied.
Active trading may increase the Fund’s transaction costs, affect performance, and increase your taxable distributions.
The Fund may invest in derivatives, such as options, futures and swaps, which carry different (and possibly greater) risks than direct investments in issuers, and are very dependent upon the sub-adviser’s judgment. In addition, investments in derivative instruments are subject to the risk that the counterparty in a transaction will be unable to honor its financial obligation to the Fund.
Diversification cannot assure against market loss. Further, the Fund may invest a large portion of its assets in one or more sectors than many other mutual funds, and this may be more susceptible to negative events affecting those sectors.
Duration is a measure of the sensitivity of the price of a fixed income investment to changes in the general level of interest rates.
There can be no assurance that the fund objectives will be met or that losses will be avoided. It is not possible to invest in an index. Past performance does not guarantee future results.
©2023 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
The Morningstar Rating™ for funds, or “star rating”, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% received 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Past performance is no guarantee of future results.
No securities are being offered. Unless otherwise stated, all information and opinions were produced by sources we believe to be accurate and are subject to change. Additional information may be required to make an informed investment decision. AAM may make a market in or have other financial interests in any given security with which this analysis suggests may be benefited from its conclusions. AAM does not offer tax advice. Past performance does not guarantee future results. Any forward-looking statements are not to be considered as forecasts but rather are presented for your consideration.
Not FDIC Insured. Not Bank Guaranteed. May Lose Value.
Distributed by IMST Distributors, LLC. Advisors Asset Management, Inc. (AAM) is an SEC-registered investment advisor and member FINRA/SIPC. SEC registration does not imply a certain level of skill or training; nor does it imply that the SEC has sponsored, recommended or otherwise approved of AAM. AAM, HIMCO and IMST are not affiliated.
18925 Base Camp | Monument, CO 80132 | www.aamlive.com
CRN: 2022-0520-10053 R Link 8313 | 23-0062
3/5
Aims to add value through a credit-focused security selection process, and active management of duration, yield curve, and market allocations
Investment Professionals
200+
4/5
Aims to add value through a credit-focused security selection process, and active management of duration, yield curve, and market allocations
B
Nearly
5/5
May work as a standalone investment or as a complement to other active and passive fixed income strategies
employees
800+
Strong team of global specialists spanning all major sub-sectors of the fixed income markets (NY and London)
100+
As of 12/31/2018
This form is for use by financial professionals only who reside in the U.S. We're unable to act on any requests to buy, sell or exchange securities included in the submission of this form. AAM will never share your contact information outside of AAM. By completing this form, you're agreeing to be contacted via email.
Explore 3 Reasons the AAM/HIMCO Short Duration Fund has the potential to meet investors’ needs and help address current concerns:
Diversified Sources of Income
Aims to Reduce Volatility
Diversification
Key risk management features include:
Expanded opportunity set includes many areas with negative to low correlations to interest rates and traditional short-term bonds. Active management and diversification across sectors provide multiple levers to seek to provide attractive current income and strong risk-adjusted returns.
$25,000 initial/$5,000 subsequent
Minimum Investment (Class I)
The 120-plus investment team at HIMCO has experience among a broad array of asset classes managing multi-sector products across multiple economic, interest rate and credit cycles. Specialized sector teams provide in-depth research in more credit intensive sectors. The Fund’s lead portfolio managers leverage the broad investment platform to gain insight into sector and duration positioning.
Sources and Disclosures
Class I shares (ASDIX) out of 204 funds in the
Ultrashort Bond category based on
risk-adjusted returns*
OVERALL MORNINGSTAR RATING
OVERALL MORNINGSTAR RATING
5/5
For example , as of 6/30/20,
1
//////////////////////////////////////////////////////////////////////////////////////////////////////////////
Fund Facts
fund Highlights
5.36%
Short Duration Commercial Mortgage-Backed Security (CMBS)
6.62%
5.83%
Intermediate Credit
5.75%
High-Quality Bank Loans
7.98%
Intermediate High-Quality High Yield
8.32%
Traditional Short-Term Bonds
Key risk management features include:
Key risk management features include:
Issuer concentration limits
Focus on liquidity through larger issue sizes, a laddered portfolio and active portfolio management
Use of only USD-denominated investments eliminates currency risk
Portfolio is stress-tested to monitor potential downside loss
Asset-Backed Securities (ABS)
0.49
15-Year Correlation
vs. Interest Rates / Traditional Short-Term Bonds
15-Year Correlation
vs. Interest Rates / Traditional Short-Term Bonds
0.22
0.13
0.40
Short Duration Commercial Mortgage Backed Securities
(CMBS)
-0.28
0.03
High-Quality Bank Loans
-0.12
0.27
Intermediate High-Quality
High Yield
Interest Rates
Traditional Short-Term Bonds
1
2
There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including loss of principal.
Diversification cannot assure against market loss. Further, the Fund may invest a large portion of its assets in one or more sectors than many other mutual funds, and this may be more susceptible to negative events affecting those sectors.
Source: Credit Suisse, Barclays Live, as of 12/31/2022.
Past performance does not guarantee future results.
There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including loss of principal.
Contact Us
For More Information
3
Asset-Backed Securities (ABS)
This asset class has historically produced higher yields relative to cash accounts and has generally exhibited less interest rate volatility relative to the broader fixed income market.
We believe, HIMCO’s strategy for its short duration fixed income fund makes it a potential opportunity worth exploring.
Laddered portfolio has the potential to provide cash flow for liquidity or be reinvested in what HIMCO believes are higher income opportunities.
The AAM/HIMCO Short Duration Fund seeks to provide current income and long-term total return.
The Fund’s permitted investments include, but are not limited to, investment grade corporate securities, high yield (“junk”) bonds, commercial mortgage-backed securities, asset-backed securities, mortgage related securities, collateralized loan obligations, bank loans, sovereign debt securities, emerging market securities, municipal securities, short-term investments, and securities issued or guaranteed as to principal or interest by the U.S. government (e.g., Treasuries). Short-term investments include, but are not limited to, commercial paper, banker’s acceptances, repurchase agreements, time deposits, corporate bank notes, and certificates of deposit.
The Fund utilizes a balanced top-down, bottom-up approach to determine underlying relative value and identify market trends and global themes.
security selection
Research analysts drive security selection through comprehensive fundamental analysis and catalysts for capital appreciation.
key perspectives
Each step of the process is analyzed from three key perspectives: fundamentals, market technicals and market pricing.
Portfolio construction
Portfolio managers are the ultimate decision makers responsible for every aspect of portfolio construction process.
3
4
^Bloomberg 1-3 Year U.S. Government/Credit Index is an unmanaged index comprised of the U.S. Government/Credit component of the U.S. Aggregate Index. It is not possible to invest directly in an index. Indices do not include cash. The AAM/HIMCO Short Duration Fund utilizes a multi-sector strategy that employs the use of substantially more fixed income sectors than are included in the index.
Diversification cannot assure against market loss. Further, the Fund may invest a large portion of its assets in one or more sectors than many other mutual funds, and thus may be more susceptible to negative events affecting those sectors.