The combination of an Average People Pillar rating and a Low Process Pillar rating limit  Harbor Scientific Alpha Income ETF to a Morningstar Medalist Rating of Negative.  The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy gets a Low Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in corporate bonds and an underweight in A rated bonds compared with category peers. 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

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. Harbor Scientific Alpha Income ETF earns a Low Process Pillar rating.    The largest detractor from the rating is 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 outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 52% also holds the process back. The parent firm's subpar risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.6 stars, detracts from the process as well. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 Compared with other funds in the Multisector Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the average strategy in the category, the managers have been substantially overweight corporate bonds in recent years. In the latest month, the strategy has relatively overweighted corporate bonds compared with its peers as well. Additionally, there's been a notable bias away from A rated bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to A rated bonds than peers. Finally, during the past few years, the fund leaned meaningfully away from debt with 10- to 15-year maturities. In recent months, the strategy also had less exposure to debt with 10- to 15-year maturities compared to its peers.

 This strategy has a 5.7% 12-month yield, higher than its average peer's 5.3%. Typically, higher yields come at the cost of higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BB.

Process

Harbor Scientific Alpha Income ETF earns an Average People Pillar rating. Michael Harper, the longest-tenured manager on the strategy, boasts 22 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.0 stars, reflecting average risk-adjusted performance compared to category peers. Michael Harper draws on a supporting cast of three additional listed managers. Together they average seven years of listed portfolio management experience. As a team, they manage two investment vehicles together, with a Negative asset-weighted average Morningstar Medalist Rating, indicating the team is positioned to generate negative alpha in aggregate. 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 Scientific Alpha Income ETF

SIFI is an actively managed fund that invests in a wide array of fixed income securities of any maturity and credit quality selected using a proprietary quantitative method.

Harbor Dividend Growth Leaders ETF

Harbor All Weather Inflation Focus ETF

Harbor Scientific Alpha High-Yield ETF

Harbor Long-Term Growers ETF

Harbor Capital Advisor's ETF business crossed a major milestone this week. Harbor Capital Advisor's ETF business recently crossed a major milestone.

Harbor Capital's ETF Lineup Crosses $1 Billion in AUM

Harbor Capital Advisors recently completed the industry's first mutual fund into an existing ETF merger. Harbor merged the Harbor High-Yield Bond Fund (HYFAX), a mutual fund, into the Harbor Scientific Alpha High-Yield ETF (SIHY), an ETF, effective February 24, 2023.

Harbor Completes Industry's First Mutual Fund Into an Existing ETF Merger

Harbor ETF Trust - Harbor Corporate Culture ETF

Harbor Corporate Culture Leaders ETF

Interest rates are up and glamour stocks are down, big; the era of cheap money has come to an end. The regime change will mean that markets remain more complex and challenged than they have in the past decade, and security selection will continue to play a much bigger role in generating returns.

4 Harbor ETFs to Invest in Through This Regime Change

Simplify Managed Futures Strategy ETF

Manager Directed Portfolios - iM DBi Managed Futures Strategy ETF

First Trust Morningstar Managed Futures Strategy Fund

KFA Mount Lucas Index Strategy ETF

On the most recent episode of ETF Prime, host Nate Geraci and Tom Hendrickson, VettaFi's chief product and innovation officer talk about the strong interest in alternatives in 2022. Later Geraci was joined by Giang Bui, head of U.S. exchange traded products at Nasdaq, to discuss ETF trends in 2022 and a look towards 2023.

ETF Prime: Tom Hendrickson on the Growing Popularity of Alternatives

Harbor Capital Advisors is looking to expand its product lineup through ETFs, according to the firm's managing director and head of ETFs Steve Cook. Speaking with ETF Trends Editor-in-Chief Lara Crigger for ETF Leaders, powered by the New York Stock Exchange, at Exchange: An ETF Experience 2022, Cook explained that Harbor is “really looking to [.

ETF Leaders Powered by the NYSE: Harbor Capital's Steve Cook

Harbor Disruptive Innovation ETF

CHICAGO--(BUSINESS WIRE)--Harbor Capital Advisors, Inc. (“Harbor Capital”) today launched the Harbor Corporate Culture Leaders ETF (HAPY), which aims to capture the alpha generated by companies with the strongest employee/employer relationships.

Harbor Capital Advisors Expands ETF Suite with Corporate Culture Leaders Strategy

Accompanying the news regarding the launch of Harbor Capital Advisors' first ETFs, the Harbor Scientific Alpha Income ETF (NYSE: SIFI) and the Harbor Scientific Alpha High-Yield ETF (NYSE: SIHY), ETF Trends was able to speak with the Harbor team about the funds, their potential, and more. ETF Trends: With the Harbor Scientific Alpha High-Yield and Harbor Scientific Alpha [.

Harbor Capital Advisors Q&A Regarding SIFI & SIHY

CHICAGO--(BUSINESS WIRE)--Harbor Capital Advisors makes ETF debut with two new scientific fixed income strategies.

Harbor Capital Advisors Launches Its First ETFs; Managed by Scientific Fixed Income Specialist BlueCove

Harbor Funds launched two new ETFs yesterday, one targeting fixed income and the other focused on high yield, both using a proprietary model based on the scientific method. The Harbor Scientific Alpha Income ETF (SIFI) utilizes a fixed income investing approach that is based on the scientific method.

News for Harbor Scientific Alpha Income ETF ETF (SIFI)