The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  Harbor Health Care ETF to a Morningstar Medalist Rating of Neutral.  The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.  

 The strategy earns a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

AbbVie

UnitedHealth Group

Eli Lilly

DexCom

Pfizer

Option Care Health

Lantheus Holdings

Inspire Medical Systems Inc

Innoviva

ICON

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

The process is bolstered by the experience of the management team, which averages 23 years at this fund. However, the rating is limited by the parent firm's five-year risk-adjusted success ratio of 52%. The measure indicates the percentage of a firm's funds that survived and beat 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. The parent firm's five-year retention rate of 52% also weakens the process.

 This strategy tends to hold smaller, higher-growth companies compared with its average peer in the Health Morningstar Category. Examining additional factor exposure, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy has also leaned away from the stocks of companies with high dividend or buyback yields over these years. This is demonstrated by the portfolio's low exposure to dividends or buybacks. While companies with high yields provide consistent income payments, they may cut payouts if their earnings fall. Similarly, in recent months, the strategy also had less exposure to the Yield factor than peers. Given the high trading volume of holdings, this fund also holds highly liquid assets. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, however, the strategy had less Liquidity factor exposure over its peers. 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 has allocations in its top two sectors, basic materials and financial services, that are similar to the category. The sectors with low exposure compared to category peers are healthcare and technology; however, the allocations are similar to the category. The portfolio is composed of 37 holdings and is relatively concentrated. In particular, 65.1% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 38.7%. And finally, in terms of portfolio turnover, on a year-over-year basis, 133% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Below Average

Process

Harbor Health Care ETF earns an Average People Pillar rating. William A. Muggia’s veteran status, with over 25 years of listed portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they manage is 3.6 stars, demonstrating above-average risk-adjusted performance. William A. Muggia has an experienced listed co-manager. Together, they average 23 years of listed portfolio management experience.  None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

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 Health Care ETF

MEDI seeks long-term capital growth by actively managing a narrow portfolio of stocks engaged in the health care sector globally.

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CHICAGO--(BUSINESS WIRE)--Harbor Capital Advisors, Inc. (“Harbor”), a premier multi-manager investment firm offering access to innovative and specialized expertise across a range of investment strategies and vehicles, today announced that it is adding to its exchange-traded fund (ETF) lineup by bringing a new Harbor Health Care ETF (MEDI) to market in November, upon completion of the registration process. This offering is in addition to the firm's growing lineup of ETFs across investment themes

News for Harbor Health Care ETF ETF (MEDI)