Hartford MidCap R4 HFMSX

Hartford MidCap’s ownership of embattled regional bank First Republic FRC has added to year-to-date underperformance, but investors shouldn’t flee this otherwise solid offering. The fund keeps its Morningstar Analyst Rating of Silver for its six cheaper share classes and Bronze for its pricier three. The fund owned First Republic at a 1.3% weighting as of Jan. 31, 2023—its latest holdings report. The stock had lost more than 70% of its value in 2023 as of March 16, with all of that drawdown coming in the first half of March after the failures of SVB SIVB and two other regional banks. That industry sold off broadly, but losses were concentrated in the stocks of banks suffering the largest loss of deposits. In First Republic’s case, many of its mostly high-net-worth clients had pulled deposits in favor of better rates from Treasuries. On March 16, a collection of large banks including JPMorgan Chase JPM announced they would deposit an aggregate $30 billion in First Republic. Still, its stock continued to fall on March 17, having lost about 25% as of midday. Morningstar attribution shows other major losses for the year to date on pharmaceutical company Jazz JAZZ and biotech United Therapeutics UTHR. Overall, the fund’s 2.5% year-to-date gain trails the Russell Midcap Growth Index by about 2.5 percentage points—about the size of the performance gap created after the regional banks issue arose. Hartford declined to comment through a representative. While the First Republic position has hurt returns, its impact won’t sink this fund; its experienced team still can deliver strong relative performance over the long term.