14 years after its first mutual fund acquisition, the Hartford
] is at it again, twice in just a few weeks. Yet don't expect Jim Davey
and his team to dive into another acquisition just yet.
On May 18, Davey unveiled
a deal to buy San Francisco-based strategic beta ETF specialist Lattice Strategies
. And on June 1 Davey unveiled
a separate deal to adopt ten U.S. mutual funds from Schroders
] while keeping
the British multinational asset manager on as the funds' subadvisor. Both deals are expected to close by the end of Q3.
Hartford Funds, whose products are primarily subadvised by institutional asset management giant Wellington, had $73.65 billion in AUM as of March 31. Lattice has four ETFs and $215 million in AUM, also as of March 31. And the ten Schroders funds in that deal have a combined $2.2 billion in AUM.
Davey, president of Radnor, Pennsylvania-based Hartford Funds, and Vern Meyer
, chief investment officer for Hartford Funds, recently chatted with MFWire
about the deals and what's next.
"We had a specific strategy objective in terms of broadening our investment platform," Meyer says when asked if any more M&A is in the cards for the mutual fund shop. "The acquisition and this strategic relationship really provide us with what we need in terms of extended capabilities."
"Right now we are completely focused on closing the deal and then executing all the opportunities we have," Davey says.
The Schroders partnership, Meyer says, provides Hartford Funds with "more exposure to emerging markets, both equity and debt." The Hartford Funds team has been working on broadening and diversifying their investment lineup.
"We also did an extensive search of investment managers," Meyer says. "We were looking for a quality institutional money manager with broad reach and depth."
"Schroders really fits in to what we do well," Meyer adds. "They're very consistent with who we are, how we distribute, how we manufacture product."
"Most everything that we do here we distribute through intermediaries," Davey says.
Meyer also clarifies that, other than subadvisory fees and the like, there is "no cost or remuneration involved with this relationship" between Hartford and Schroders.
As for the Lattice deal, Davey says that "strategic beta is one of the items that frequently came up" when talking with FAs and other intermediaries.
"We did look at building it internally," Davey says. "If you go that organic route, it's going to take quite a while"
"This really accelerated our entry into ... this segment of the industry," Davey adds.
The Hartford Funds and Lattice folks have been working on the deal for almost a year, Davey says, though his team "knew a couple of folks over there to begin with."
"We did approach them and had some very productive conversations ... We really like the folks at Lattice. We like their philosophy on investment management," Davey says. "Multi-factor strategic beta and high active share mutual funds are a really nice complement to each other."
"This is a really nice addition ... to what we do today from a mutual fund standpoint," Davey adds. "From brand standpoint it really resonates for us."
Davey confirms that the Lattice team of more than 20 will "all be Hartford employees upon close."
"We're going to keep the office open in San Francisco," Davey says.
Next up is introducing Lattice to the Hartford Funds sales team and distribution partners, Davey says.
On the branding side, the 10 Schroders funds that Hartford is adopting will become the Hartford Schroders Funds
. Yet there's no official word yet on the fate of Lattice's brand.
"That's something that we'll look into as the deal closes," Davey says, adding that any thoughts now would be "too preliminary."
"We're excited," Meyer says. "Both of those opportunities have broadened our investment platform. We are going to need broad capabilities."
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