4 ETFs for Today's Environment
We believe four key themes are impacting today's financial markets – and that investors who take action to address them in their portfolios may be better positioned to achieve their long-term goals.
1. With inflation persisting into 2023, we believe commodities are still an attractive diversifier.
We believe commodities can help act as a portfolio risk dampener given their low historical correlation to stocks and bonds.
Harbor Commodity All-Weather Strategy ETF (HGER)
HGER's dynamic approach to commodities offers inflation hedging potential for today's environment and diversification benefits for the long-term.
2. Economic and earnings growth expectations have been deteriorating, creating opportunities for active managers to identify companies with resilient fundamentals.
2023 could represent an attractive entry point for long-term growth investors, particularly if inflation continues moderating from peak 2022 levels.
Harbor Long-Term Growers ETF (WINN)
WINN's focus on quality companies that have the potential to grow earnings over time is key given current earnings scarcity. We believe WINN is well positioned for today and as a long-term portfolio anchor.
3. Dividend growth has historically performed well throughout market cycles – providing income potential and an inflation hedge.
We believe dividends will play an increasingly important role in equity returns and mitigate risk in the face of a slowing economy.
Harbor Dividend Growth Leaders ETF (GDIV)
GDIV has the potential to serve as a long-term source of yield, equity upside participation during periods of market advances, and downside support during market declines.
4. High yield can serve as an attractive alternative for investors looking to reduce risk in the current environment.
Given strong performance and historically lower volatility, we believe high yield can serve as an attractive alternative for investors looking to reduce risk in the current environment.
Harbor Scientific Alpha High-Yield ETF (SIHY)
SIHY may offer important diversification benefits in the face of interest rate and economic uncertainty.
Harbor Capital Advisors
Harbor Capital Advisors is an asset manager known for curating an intentionally select suite of active ETFs from boutique managers. Investors looking for distinct and differentiated investment options for their portfolios often connect with our passionate obsession to find what we believe to be innovative – bold solutions that have the potential to produce compelling, risk-adjusted returns.
Investing involves risk, principal loss is possible. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value. The ETFs are new and have limited operating history to judge.
HGER Risks: 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. 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.
Commodity Risk: The Fund has exposure to commodities through its and/or the Subsidiary’s investments in commodity-linked derivative instruments. Authorized Participant Concentration/Trading Risk: Only authorized participants (“APs”) may engage in creation or redemption transactions directly with the Fund. Commodity-Linked Derivatives Risk: The Fund’s investments in commodity-linked derivative instruments (either directly or through the Subsidiary) and the tracking of an Index comprised of commodity futures may subject the Fund to significantly greater volatility than investments in traditional securities.
WINN Risks: 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 which 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.
GDIV Risks: Investments involve risk including the possible loss of principal. 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. The Fund may invest in a limited number of companies or at times may be more heavily invested in particular sectors. As a result, the Fund's performance may be more volatile, and the value of its shares may be especially sensitive to factors that specifically effect those sectors. The Fund may invest in foreign securities which may be more volatile and less liquid due to currency fluctuation, political instability, government sanctions, social and economic risks. Foreign currencies can decline in value and can adversely affect the dollar value of the fund.
SIHY Risks: All investments involve risk including the possible loss of principal. 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. 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.
Diversification does not assure a profit or protect against loss in a declining market.
The views expressed herein may not be reflective of current opinions, are subject to change without prior notice, and should not be considered investment advice or purchase a particular security.
Quantix Commodities LP (“Quantix”) is a third-party subadvisor to the Commodity All-Weather Strategy ETF. Jennison Associates LLC is a third-party subadvisor to the Harbor Long-Term Growers ETF. Westfield Capital Management is a thirdparty subadvisor to the Harbor Dividend Growth Leaders ETF. BlueCove Limited is a third-party subadvisor to the Harbor Scientific Alpha High-Yield ETF.
Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.