Harbor Capital Advisors has expanded its ETF lineup with the launch of firm’s first multi-manager small-cap equity strategy.
The Harbor Small Cap Explorer ETF (QWST), listed on the NYSE on April 27 with an 80 basis point expense ratio, utilizes a unique active multi-strategy approach. QWST invests in small-cap companies defined as those having a market capitalization in the range of the Russell 2500 Index, excluding its largest 250 companies, at the time of purchase.
“We believe that QWST’s multi-strategy approach provides natural diversification benefits and greater risk management potential relative to single strategy offerings,” Harbor told VettaFi. “Importantly, QWST offers enough capacity to meet market demands ($4 billion total capacity) and a competitive cost structure (0.80% expense ratio).”
Harbor’s Multi-Asset Solutions Team’s (MAST) seeks to optimize the diversification benefits of the underlying managers, minimizes factor risks, and enable idiosyncratic risk to drive portfolio returns, according to the firm. MAST’s approach is focused on three key tenets: Optimization scenarios, Cross Sectional Risk Exposures, and Qualitative Review.
“Ultimately, MAST is seeking a portfolio with diversification of styles, philosophies, and specializations that maintains significant active positioning,” Harbor said.
The five subadvisors for QWST include Connacht Asset Management, Copeland Capital Management, Granahan Investment Management, Huber Capital Management, and Reinhart Partners. Each subadvisor has its own distinct investment style and will act independently from the other subadvisors.
“Harbor continues to demonstrate they are committed to growing their ETF presence and tapping into strong active management capabilities to meet advisors that have embraced the structure,” Todd Rosenbluth, head of research at VettaFi, said.
QWST is the 13th active transparent ETF launched by Harbor since the firm’s debut in the ETF market in September 2021.
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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 harborfunds.com or call 800-422-1050. Read it carefully before investing.
All investments involve risk including the possible loss of principal. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value. The ETF is new and has limited operating history to judge.
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. The Fund’s performance may be more volatile because it may invest in issuers that are smaller companies. Because the Fund is managed pursuant to model portfolios provided by nondiscretionary Subadvisors that construct the model portfolios but have no authority to effect trades for the Fund’s portfolio, it is expected that the Advisor will effect trades on a periodic basis as the Advisor receives the model portfolios, and therefore less frequently than would typically be the case if the Fund employed discretionary subadvisors that effected trades for the Fund’s portfolio directly, which could affect the performance of the Fund. The Subadvisors’ investment styles and security recommendations may not always be complementary, and the Subadvisors’ judgment about the attractiveness, value and growth potential of a particular security may be incorrect, which could affect the performance of the Fund. 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. There can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board of Trustees may determine to liquidate the Fund. REITs may decline in value as a result of factors affecting the real estate sector including the risk that REITs are unable to generate cash flow to make distributions to unitholders and fail to qualify for favorable tax treatment.
Diversification does not assure a profit or protect against a loss in a declining market.
Shares are bought and sold at market price not net asset value (NAV). Market price returns are based upon the closing composite market price and do not represent the returns you would receive if you traded shares at other times.
The Russell 2000® Index measures the performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000® and includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000® Growth Index and Russell® are trademarks of Frank Russell Company. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Alpha is a measure of risk (beta)-adjusted return.
Beta is a measure of systematic risk, or the sensitivity of a fund to movements in the benchmark. A beta of 1 implies that the expected movement of a fund’s return would match that of the benchmark used to measure beta.
ROE reversion is from traditional economics theory, when competitive market forces (example: a firm’s operating environment) tend to drive a firm’s return on equity (ROE) back to its long-run equilibrium level within a period of time – this is ROE exhibiting mean reversion.
Foreside Fund Services, LLC is the Distributor of the Harbor Small Cap Explorer ETF
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