Hartford Large Cap Growth ETF

HFGO

Market cap $195M

Growth stocks significantly underperformed their value counterparts over the quarter, as investors rotated toward cyclicals and more defensive areas of the market amid anxiety about the disruptive influence of AI. Sector allocation, a result of the portfolio's bottom-up stock-selection process, was the primary driver of relative underperformance. Top relative detractors from performance during the quarter included not owning Costco, and overweight positions in KKR and DoorDash.

The Hartford Large Cap Growth ETF underperformed the Russell 1000 Growth Index during the quarter, though the Fund delivered overall positive returns. Security selection was the primary driver of relative underperformance. Weak selection in information technology and communication services was partially offset by selection in healthcare and industrials. Sector allocation, a result of our bottom-up stock selection process, contributed to returns.

I am initiating coverage of the Hartford Large Cap Growth ETF with a Hold rating due to existing risks and disadvantages. Actively managed, growth-focused HFGO offers stronger revenue, EBITDA, and EPS growth rates than IWF and SCHG while sporting decent quality. However, its past performance was mixed, with an outstanding 2024 but dismal 2022. Overall, it has trailed IWF, IVV, QQQ, and SCHG since its inception in 2021.

After a slow start, the actively managed HFGO has rebounded to become one of the top-performing large-cap growth funds over the last three years, outperforming IWF, SCHG, and MGK. The fund consistently overweights big tech stocks, though has the ability to include some mid-cap stocks with great growth potential. The ETF has a 0.59% ER and $148M in AUM. My fundamental analysis reveals excellent GARP features, including an impressive 26.36% one-year estimated earnings per share growth rate and 30.48x forward P/E ratio.

2024 was an incredible year for exchange-traded funds (ETFs) as an investment vehicle, with investors funneling a record-breaking $1.1 trillion in new assets into these funds. With new ETFs launching all the time, investors now have more than 12,000 different options from which to choose.