Weakness in Harbor Long-Short Equity ETF's People and Process Pillar ratings limits this strategy to a Morningstar Medalist Rating of Negative. The portfolio maintains a sizable cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The team managing the strategy earns a Low People Pillar. The strategy gets a Below Average Process Pillar rating.  Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

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CrowdStrike

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Harbor Long-Short Equity ETF earns a Below Average Process Pillar rating. 

The process benefits from the experience of the management team, which averages 21 years at this fund. However, the rating is weakened by the parent firm's five-year retention rate of 51%, which suggests it could do more to retain its portfolio managers. The parent firm's five-year risk-adjusted success ratio of 51% also limits the process. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

 This strategy leans toward smaller, higher-growth companies compared with its average peer in the Long-Short Equity Morningstar Category. Examining additional factor exposure, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum approaches bet that rising stocks will continue to rise and that lagging stocks will continue to lag. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. This orientation tends to pay off most prominently when markets are hot. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, the strategy had more exposure to high-liquidity stocks compared with Morningstar Category peers in recent months. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss.  More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in healthcare and technology relative to the category average by 11.1 and 7.8 percentage points, respectively. The sectors with low exposure compared to category peers are financial services and industrials, underweight the average by 12.2 and 7.1 percentage points of assets, respectively. The strategy owns 120 securities, and is in a category where the typical fund has approximately 17.5% of assets concentrated in the top 10 holdings.

Below Average

Process

Harbor Long-Short Equity ETF earns a Low People Pillar rating. The primary detractor from the rating is the number of months that the management team has been running this vehicle together. Since this is a newly incepted product, more time is needed to monitor the team's capability at executing the strategy. The parent firm's subpar risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.6 stars, also limits the team. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The parent firm's five-year retention rate of 51% detracts from the rating further.

People

A history of thoughtful manager selection and continued investment in its research team underpin Harbor Capital Advisors' Above Average Parent rating.

Harbor is an independent subsidiary of Orix Corporation Europe N.V., itself a subsidiary of Japanese financial-services firm Orix, which bought Harbor's previous parent Robeco in 2013. Today Robeco, Harbor, and other asset managers operate autonomously under Orix, which takes a hands-off approach toward its subsidiaries.

Harbor has long been known for hiring best-in-class subadvisors to manage its roughly $64 billion held almost exclusively in actively managed mutual funds. Yet the firm has expanded its vehicle lineup in recent years: from February 2020 through March 2022, the firm introduced a collective investment trust version of an existing open-end strategy as well as six transparent, active exchange-traded funds. The firm has also shaken up its subadvisor lineup, removing Pimco from Harbor Core Plus HABDX in February 2022 and hiring smaller and less established asset managers like BlueCove and Quantix Commodities to manage its newer ETF offerings. These moves break new ground for Harbor, but the firm has invested in new data and analytics tools to help its capable manager research team oversee the expanding subadvisor roster and has retained long-standing subadvisor relationships where they continue to add value.

Above Average

Parent

Harbor Long-Short Equity ETF

LSEQ is actively managed, seeking long-term capital growth. The portfolio will generally be 40%-60% net long in equity securities, with the possibility of extending to 150% long. Long positions prioritize delivering shareholder yield, while short positions concentrate on those anticipated to decline.

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Harbor Capital Advisors has added a long-short equity ETF to its range of funds. The Harbor Long-Short Equity ETF (LSEQ) offers investors equity exposure with an elevated focus on downside mitigation and diversification benefits.

Harbor Launches Long-Short Equity ETF: LSEQ

CHICAGO--(BUSINESS WIRE)--Harbor Capital Advisors, Inc. ("Harbor"), the asset manager that continues to curate a select suite of actively managed ETFs, has now launched the Harbor Long-Short Equity ETF (Ticker: LSEQ). Managed by Disciplined Alpha LLC (“Disciplined Alpha”), the Harbor Long-Short Equity ETF utilizes an actively managed multi-asset approach to achieve its investment objective of providing long-term growth of capital. In an effort to achieve the objective, the Fund establishes long.

Harbor Capital Advisors Launches Long-Short Equity ETF

News for Harbor Long-Short Equity ETF ETF (LSEQ)