Harbor Capital Advisor’s ETF business crossed a major milestone this week.
Harbor Capital Advisor’s ETF business recently crossed a major milestone.
The Chicago-headquartered asset manager has reached $1 billion in assets under management in its suite of ETFs, which comprises 13 active funds. Harbor Capital entered the ETF business less than two years ago. It previously focused on delivering compelling investment solutions in a mutual fund wrapper.
“It’s tremendous to see Harbor reach a key milestone for its ETF business,” Todd Rosenbluth, head of research at VettaFi, said. “The firm has clearly committed to growing in the ETF industry, not just in mutual funds. They have a strong lineup of active strategies that have gained traction with advisors.”
Harbor Capital utilizes an exclusive multi-manager approach that sets it apart from other issuers. The asset manager sources external investment teams to manage its funds. They offer investors a highly experienced management team and a wide range of asset classes and themes.
Developments in Harbor Capital’s ETF Business
Harbor Capital launched its first two ETFs — a pair of active fixed income strategies — in September 2021: the Harbor Scientific Alpha Income ETF (SIFI) and the Harbor Scientific Alpha High-Yield ETF (SIHY).
While SIFI and SIHY were the firm’s first ETF launches, the Harbor Dividend Growth Leaders ETF (GDIV) is the firm’s ETF with the longest track record.
GDIV was added to the firm’s ETF lineup in May 2022. This was done through the conversion of an existing mutual fund that carried a nine-year track record and nearly $150 million in assets under management. The conversion was a solution to offer investors the same strategy but with lower fees and in a more tax-efficient vehicle.
Crossing $1 billion in assets under management isn’t the first major milestone for Harbor Capital, however.
In February, the firm completed the industry’s first mutual fund into an existing ETF merger. The firm merged an existing mutual fund into SIHY. That allowed the mutual fund’s investors the liquidity and tax advantages of an ETF while infusing the ETF with $117 million in new assets.
Additionally, the Harbor Commodity All-Weather Strategy ETF (HGER), the Harbor Long-Term Growers ETF (WINN), and GDIV were among the first funds to migrate to the NYSE from NYSE Arca, seeking to improve the investor experience.1
Since transferring, the ETFs have traded with tighter quoted spreads and bigger quoted sizes. At the same time, the opening and closing auctions have executed at prices closer to relevant benchmarks. Liquidity may be better during the day, and opening and closing auction prices are usually closer to key benchmarks.
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1VettaFi, Todd Rosenbluth, as of January 5, 2023.
Investors should carefully consider the investment objectives, risks, charges and expenses of a Harbor fund before investing. To obtain a summary prospectus or prospectus for this and other information, visit harborcapital.com or call 800-422-1050. Read it carefully before investing.
All investments involve risk including the possible loss of principal. Please refer to the Fund’s prospectus for additional risks associated with each Fund. For the most current standardized performance, holdings and current yields: SIHY, SIFI, GDIV HGER WINN
SIHY and SIFI Risks: Fixed income securities fluctuate in price in response to various factors, including changes in interest rates, changes in market conditions and issuer-specific events, and the value of your investment in the Fund may go down. As interest rates rise, the values of fixed income securities held by the Fund are likely to decrease and reduce the value of the Fund’s portfolio. There is a greater risk that the Funds will lose money because they invest in below-investment grade fixed income securities and unrated securities of similar credit quality (commonly referred to as “high-yield securities” or “junk bonds”).
These securities are considered speculative because they have a higher risk of issuer default, are subject to greater price volatility, and may be illiquid. Because the Funds may invest in securities of foreign issuers, an investment in the Funds is subject to special risks in addition to those of U.S. securities. These risks include heightened political and economic risks, greater volatility, currency fluctuations, higher transaction costs, delayed settlement, possible foreign controls on investment, possible sanctions by government bodies of other countries, and less stringent investor protection and disclosure standards of foreign markets.
GDIV: There is no guarantee the investment objective of the Fund will be achieved. The Fund’s emphasis on dividend paying stocks involves the risk that such stocks may fall out of favor with investors and under-perform the market. There is no guarantee that a company will pay or continually increase its dividend.
HGER: There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile. The equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. A non-diversified Fund may invest a greater percentage of its assets in securities of a single issuer, and/or invest in a relatively small number of issuers. It is more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio.
WINN: All investments involve risk including the possible loss of principal. There is no guarantee that the investment objective of the Fund will be achieved. Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions. At times, a growth investing style may be out of favor with investors. This could cause growth securities to underperform value or other equity securities.
Since the Fund may hold foreign securities, it may be subject to greater risks than funds invested only in the U.S. These risks are more severe for securities of issuers in emerging market regions. A non-diversified Fund may invest a greater percentage of its assets in securities of a single issuer, and/or invest in a relatively small number of issuers. It is more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio.
BlueCove is a third-party subadvisor to the Harbor Scientific Alpha High-Yield ETF (SIHY) and the Harbor Scientific Alpha Income ETF (SIFI).
Westfield Capital is the subadvisor for the Harbor Growth Leaders (GDIV).
Quantix Commodities, LP is the subadvisor for the Harbor Commodity All-Weather Strategy ETF (HGER).
Jennison Associates LLC is an independent subadvisor to the Harbor Long-Term Growers ETF (WINN). The Fund is managed by Harbor Capital Advisors, Inc.
This article was prepared as Harbor Funds paid sponsorship with VettaFI.
Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.