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Harbor Capital’s Commodity ETF Quietly Outperforms Bigger Rivals
Author: Tony Dong, CETF®, Lead ETF Analyst @ ETFCentral
The Harbor Commodity All‑Weather Strategy ETF (HGER) has outperformed peers by sidestepping common structural pitfalls.
It’s been a tough half‑decade for commodity investors, marked by extreme volatility. Oil prices briefly went negative during the March 2020 COVID shock, only to spike again during the Russian invasion of Ukraine in 2022. More recently, the second Trump administration’s shifting tariff policies have added another layer of uncertainty.
These swings, combined with structural flaws in many commodity ETFs, have meant poor returns for investors.
Contango—when futures prices are higher than spot prices—erodes returns when ETFs roll contracts. Layer on high management fees, and it’s no surprise many investors have fled the space, despite commodities’ potential for diversification thanks to their low correlation with stocks and bonds.
But not every commodity ETF has struggled. One standout has been the Harbor Commodity All-Weather Strategy ETF (HGER). With just over $700 million in assets under management, HGER has set itself apart from larger, more established competitors through a quantitative, rules‑driven approach.
HGER explained
HGER tracks the Quantix Commodity Index, which is built on 24 of the most liquid commodity futures listed on U.S. or U.K. exchanges.
Instead of simply spreading assets across sectors, the index uses a quantitative framework to emphasize commodities with the strongest link to inflation and the most favorable cost of ownership. In plain terms, the goal is to hold futures contracts where expected inflation sensitivity is highest and roll costs are least punitive.
The methodology is flexible across different economic regimes. Two key lenses are used: scarcity, when physical shortages drive price spikes, and debasement, when monetary or fiscal policies erode the purchasing power of currency.
Depending on the environment, the index shifts weights toward commodities that best reflect those dynamics, whether it’s increasing exposure to gold in a debasement scenario or boosting industrial inputs when scarcity is the bigger concern.
This framework ensures that allocations are not static. Commodities with weak inflation pass‑through are screened out, while those with strong correlations to consumer price trends are emphasized.
Sector weights are also balanced to capture inflation protection from multiple sources and roll yield—the cost or benefit of rolling futures contracts forward—is actively managed to minimize performance drag. The index is rebalanced quarterly to keep the portfolio aligned with current conditions.
HGER is structured as a 1940 Act fund, which means investors avoid the headaches of K‑1 tax forms. The 0.68% expense ratio isn’t cheap, but for an actively designed commodity strategy, it’s in line with category norms.
HGER performance versus peers
Per our research, from 2022‑02‑10 to 2025‑09‑22, HGER led a peer set of broad commodity funds on total return and quality‑of‑return metrics. HGER returned +40.3% cumulative with a 9.8% CAGR. HGER’s low beta also suggests better diversification benefits alongside equities and bonds than the index trackers.
Even so, HGER managed a solid balance of return and risk, pairing stronger compounding with drawdowns that were moderate relative to the traditional index‑based products.
My Thoughts on HGER
In my view, HGER is a good example of how a commodities ETF can get it right.
It diversifies across a broad basket rather than concentrating in a single contract, and weights exposures through an inflation and debasement lens rather than simply by trading volume or index prominence.
The fund’s roll process is also more thoughtful than the plain‑vanilla approach of always buying the front month, which often leaves investors exposed to heavy contango.
Structuring it as a 1940 Act fund avoids saddling shareholders with a K‑1 at tax time, and keeping the expense ratio at 0.68% helps minimize drag compared to other active or rules‑based commodity strategies.
That said, it isn’t perfect, as I particularly like how COM can go flat in difficult markets, which HGER doesn’t allow. But overall, HGER gets the critical elements right, and the payoff has been clear in its relative performance.
Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. It is essential to seek guidance from a registered financial professional before making any investment decisions.
The gross expense ratio of the Harbor Commodity All‑Weather Strategy ETF is 0.68%
Performance data shown represents past performance and is no guarantee of future results. Fund performance is net of management fees and expenses and reflects reinvested dividends and distributions. Past performance reflects the beneficial effect of any expense waivers or reimbursements, without which returns would have been lower. Investment returns and principal value will fluctuate and when redeemed may be worth more or less than their original cost. Returns for periods less than one year are not annualized. Current performance may be higher or lower and is available through the most recent month end at harborcapital.com or by calling 800-422-1050.
The Quantix Commodity Total Return Index is calculated on a total return basis, which combines the returns of the futures contracts with the returns on cash collateral invested in 13‑week U.S. Treasury Bills and is not available for direct investment. The Quantix Commodity Index was developed by Quantix Commodities LP and is owned by Quantix Commodities Indices LLC. The Bloomberg Commodity Index Total Return Index measures the performance of future contracts on physical commodities which traded on US exchanges and London Metal Exchange. The commodity weightings are based on production and liquidity, subject to weighting restrictions applied annually. These unmanaged indices do not reflect fees and expenses.
Investing involves risk, principal loss is possible. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value. Harbor ETFs are new and have limited operating history to judge.
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.
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.
Beta is a measure of systematic risk, or the sensitivity of a fund to movements in the benchmark.
CAGR, or Compound Annual Growth Rate, is defined as the measure of an investment’s annual growth rate over time, accounting for the effect of compounding.
Diversification does not assure a profit or protect against loss in a declining market.
This article, authored by Tony Dong, CETF, Lead ETF Analyst, ETF Central on September 25, 2025 was redistributed with permission by Harbor Capital.
Harbor Capital is not affiliated with ETF Central
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