Hartford World Bond: Daring to Be Different

Miriam Sjoblom: Bronze-rated Hartford World Bond was launched during the European sovereign debt crisis in 2011. That period really highlighted the flaws of global-bond indexes, which are dominated by the most indebted developed-markets countries.

The Wellington team running this fund doesn't think a benchmark-oriented approach can give investors the safety they want from a bond fund, so they don't tie themselves to a benchmark. Instead, they do their own analysis to select countries with three traits: stable-to-improving fundamentals, compelling valuations, and very liquid debt markets.

The result is a core portfolio that can look quite different from the market. Japan, which is usually the largest country in the index, has never made the cut, while smaller debt issuers such as Norway and Denmark have had sizable weights.

Those core countries take up the bulk of the portfolio. Away from the core, a team of specialist managers each run a small opportunistic allocation in areas such as global rates and currencies, corporates, and securitized credit.

We like that this strategy dares to be different but in a way that limits the risks. We have a lot of confidence in Wellington's talented global bond team. And results have been promising so far. Over its five-year history, the fund has beaten benchmarks and most world bond peers with much less volatility and better downside protection.

The one thing we don't like about the fund is its above average price tag, which matters in today's environment of extremely low, and in some cases, negative yields.