Wellington's success is causing changes at The Hartford. The insurer is building its own investment capabilities for funds in response to Wellington Management's message that it has filled its capacity to manage equities. Wellington is currently the subadvisor for a number of Hartford's mutual funds.
The success of those funds has helped to strain Wellington's capacity. Hartford's funds have ballooned to $33 billion in assets from just $7 billion a year ago. Hartford's investment affiliate manages about a fifth of that money. The growth has come as Hartford redirected much of its annual $25 million annual advertising budget to highlight its fund group over the past three years. Much of that advertising is directed at securities brokers.
The Wall Street Journal's Fund Track
column reports that Hartford Investment Management Co. (HIMCo), traditionally a specialist in fixed income, will add equity capabilities in order to advise the insurer's funds. Hartford has closed a number of funds, including its Small Company, MidCap and MidCap Value funds because of Wellington's capacity constraints (Small Company has since reopened). The firm also tapped HIMCo to manage a new MidCap Growth Fund (Wellington won a subadvisory mandate on a new balanced fund that also opened at the end of July).
The insurer also tapped three sub-advisors -- Kayne Anderson Rudnick Investment Management; Metropolitan West Capital Management; and SSgA Funds Management -- for a new Select SmallCap Value Fund.
"As we've grown and as Wellington has grown and HIMCO's capabilities have grown, it's become important to start to build out an equity capacity at HIMCO if Wellington is running into capacity constraints," John Walters, president of the U.S. Wealth Management Group at Hartford Financial Services Group Inc., told the paper.
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