Hartford Funds To Buy Lattice Strategies

May 18, 2016

Hartford Funds is acquiring Lattice Strategies, the San Francisco-based firm known for its factor-focused and risk-calibrated indexes as well as a growing family of smart-beta ETFs. Terms of the deal were not disclosed.

The acquisition is the latest in a growing number of similar deals taking place across the ETF industry. Late in 2014, Janus Capital, the Denver-based fund manager, bought ETF issuer VelocityShares. Later that year, New York Life acquired IndexIQ. And just last week, Columbia Threadneedle Investments, the global asset management group behind Columbia Management Investment Advisers, said it would acquire Emerging Global Advisors. These are just a few of the mergers taking place in money management these days.

Hartford Large Active Fund Manager

Hartford Funds is a large active fund manager, with more than $73.6 billion in mutual fund assets. But the firm has no presence in the quickly growing ETF market, which today boasts more than $3 trillion in assets globally, and is already bigger than the hedge fund space.

To Hartford, the acquisition opens the door for the firm to jump into ETFs. According to the firm, joining forces with Lattice—which is known for its multifactor and risk-centered strategic-beta ETFs—will allow the company to build on its active management platform, and invest in ETF product development.

“The strategic beta space is a natural extension of Hartford Funds’ actively managed platform, enabling us to enter a fast-growing category that will serve as a foundation for growth in the future,” Jim Davey, president of Hartford Funds, said in a press release.

Lattice first launched its first three ETFs a little over a year ago—the Lattice U.S. Equity Strategy ETF (ROUS), the Lattice Emerging Markets Strategy ETF (ROAM), and the Lattice Developed Markets (ex-US) Strategy ETF (RODM)—and has since added a fourth fund to the lineup, the Lattice Global Small Cap Strategy ETF (ROGS). In all, the company has some $82 million in ETF assets and $215 million in total assets today.

Lattice’s footprint in the ETF space goes beyond the role of issuer, however. The company originally provided indexes to benchmark ETFs from other providers such as Vident Financial, but now it focused its efforts exclusively on its strategies.

The deal is expected to close in the third quarter of this year.

Contact Cinthia Murphy at [email protected].

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