Fixed income is an asset class that offers plenty of upside for investors, in particular those planning for retirement. Yet, says Jim Tracy, national sales director for Minneapolis-based The Hartford Mutual Funds (a division of Hartford Life), many investors and financial advisors are more than a little wary of fixed income, especially now that it has become extremely complex with the proliferation of derivatives and other structured products–even if these have created great new investment opportunities.
“Most financial advisors don’t know how to include, say, a floating-rate loan or an emerging market bond in a client’s portfolio,” Tracy says. “It is hard for advisors to purchase fixed-income assets on their own, even if they know that these can provide attractive returns for their clients, and very few have a strategy for diversifying their clients’ fixed-income investments.”
As such, there is an overwhelming demand from advisors for “packaged” solutions in the fixed-income arena, Tracy says, investment vehicles that offer easy access to a broad range of fixed-income assets. In order to meet this demand, the Hartford has recently come out with three new funds: A high yield municipal bond fund; a strategic income fund and a new fund-of-funds called “The Hartford Checks and Balances Funds,” which brings together three of the company’s already existing funds.
Both the high yield municipal bond fund and the strategic income fund, Tracy says, seek to offer investors that are saving for retirement the benefits of the diversity of the fixed-income market through a single entry. “These funds give advisors and their clients access to fixed-income asset classes that they could not get on their own,” Tracy says.
In the high yield municipal bond space, the new Hartford fund will seek to maximize tax-free income. The fund has $13 billion in assets, and hopes to meet some of the great demand financial advisors have for tax-free, municipal bonds, Tracy says.
“Financial advisors really like high yield municipal debt because their clients want tax-free investments,” he says. “We’re offering them a good way to get to the asset class.”