A MESSAGE FROM THE PRESIDENT
Dear Shareholders:
Thank you for investing in Hartford Mutual Funds. The following is the Funds’ Semi-Annual Report that covers the period from November 1, 2021 through April 30, 2022.
Market Review
During the six months ended April 30, 2022, U.S. stocks, as measured by the S&P 500 Index,1 lost 9.65%. It’s been a difficult period for equities as U.S. and global policymakers have had to contend with the realities of persistent inflation, the gradual removal of fiscal and monetary support from the economy, an uneven winding down of pandemic restrictions, and a grinding war between Russia and Ukraine that has scrambled markets and heightened volatility.
The inflationary surge that began in mid-2021 became the dominant economic story for the period ended April 30, 2022 as nearly each monthly rise in the Consumer Price Index (CPI)2 exceeded the numbers reported in the previous month. By April 2022, the annual inflation rate, as measured by the CPI, rose by 8.3% a small retreat from the 8.5% CPI report from the previous month, but, nonetheless, a level of inflation not seen since the 1980s as prices for gasoline, food, and housing continued to increase.
The market’s early 2022 struggles stood in sharp contrast with the 28.71% annual return delivered by the S&P 500 Index for 2021. Even as equities were posting positive returns last year, the U.S. Federal Reserve (Fed) in December 2021 was already starting to implement a plan to reduce the $120 billion-per-month asset purchases that had been used to bolster an economy rocked by the pandemic in early 2020.
In March 2022, the Fed officially raised the federal funds rate by a quarter-percent. However, subsequent Fed minutes revealed that a number of the Federal Open Markets Committee members had grown alarmed by the accelerating inflation numbers and seemed to favor even more aggressive rate increases. By the period’s end, several rate hikes of at least a half-percent were priced into analysts’ expectations.
The signature event of the period was the February 24, 2022 invasion of Ukraine by Russia’s armed forces. The war caused an immediate spike in worldwide oil and commodity prices as Western nations joined together to impose economic sanctions against Russia. Early on, the Biden administration announced an embargo on Russian crude-oil imports, but then moved to ease the impact on domestic gasoline prices by releasing a million barrels of oil per day from the nation’s strategic petroleum reserve.
As the period ended, equity markets continued to display heightened volatility. Although the unemployment rate settled in at 3.6% in March and April of 2022 after a pair of strong job reports, the bond market also flashed signals that were interpreted to indicate that an overheated economy could lead to recession further down the road.
As 2022 progresses, it seems clear that inflationary pressures, Fed policy, and geopolitical tensions will continue to have a major impact on investments. Nowadays, it’s more important than ever to maintain a strong relationship with your financial professional.
Thank you again for investing in Hartford Mutual Funds. For the most up-to-date information on our funds, please take advantage of all the resources available at hartfordfunds.com.
James Davey
President
Hartford Funds