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Harbor Scientific Alpha High-Yield ETF (SIHY): Risk Mitigation is Key to Outperformance

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Success in high-yield bond investing is often less about identifying big winners and more about avoiding big blowups. Consequently, careful security selection is a critical element of risk management for high-yield bond strategies. That’s why BlueCove, subadvisor to Harbor Scientific Alpha High-Yield ETF (SIHY), grounds its process on detailed fundamental analysis of high-yield issuers. The investors at BlueCove believe that they can generate excess returns by steering clear of the riskiest securities and emphasizing what they deem to be more creditworthy securities.

BlueCove’s risk-oriented mindset has been on display in SIHY’s performance since its inception on September 14, 2021. As shown on the chart below, SIHY has not only held its own during rallies by keeping up with its benchmark (the ICE BofA US High Yield Index) but has also importantly managed to limit the impact of downturns.

SIHY vs. ICE BofA US High Yield Index
Average 1-Month Excess Returns, Up/Down Markets for ICE BofA US High Yield
Oct 2021 - Dec 2023 (Computed Monthly)
SIHY vs. ICE BofA US High Yield Index Average 1-Month Excess Returns, Up/Down Markets for ICE BofA US High Yield Oct 2021 -Dec 2023 (Computed Monthly)

Source: Morningstar Direct.

3 Months YTD 1 Yr. Since Inception (09/14/2021) Total Expense Ratio
Harbor Scientific Alpha High-Yield ETF (NAV) 7.83% 13.68% 13.68% 2.03% 0.48%
Harbor Scientific Alpha High-Yield ETF (Market) 8.19% 13.31% 13.31% 1.87% -
ICE BofA US High Yield Index (H0A0) 7.06% 13.46% 13.46% 0.42% -

Performance data shown represents past performance and is no guarantee of future results. Past 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.

For most current performance please click here.

Thanks to the power of compounding, keeping up during rallies, and mitigating risk on the downside, SIHY has handily outpaced its benchmark and the majority of its Morningstar category peers since its inception (see chart below).

Harbor Scientific Alpha High-Yield ETF (SIHY) NAV &
Morningstar US High Yield Bond Category
vs. ICE BofA US High Yield TR USD
Cumulative Excess Returns: 9/15/2021 -12/31/2023 (Daily)
Harbor Scientific Alpha High-Yield ETF (SIHY) NAV & Morningstar US High Yield Bond Category vs. ICE BofA US High Yield TR USD Cumulative Excess Returns: 9/15/2021 -12/31/2023 (Daily)

Source: Morningstar Direct.

Performance data shown represents past performance and is no guarantee of future results. Past 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.

For more information about BlueCove’s active approach with SIHY, please visit our website.


Important Information

Risks

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.

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 Fund 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 Fund may invest in securities of foreign issuers, an investment in the Fund 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.

Benchmarks

The ICE BofAML US High Yield Index (H0A0) is an unmanaged index that tracks the performance of below investment grade U.S. Dollar-denominated corporate bonds publicly issued in the U.S. domestic market. All bonds are U.S. dollar denominated and rated Split BBB and below. This unmanaged index does not reflect fees and expenses and is not available for direct investment.

Disclosures

In relation to any data attributed to Morningstar, please note the following: © Morningstar 2024. All rights reserved. Use of this content requires expert knowledge. It is to be used by specialist institutions only. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied, adapted or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information, except where such damages or losses cannot be limited or excluded by law in your jurisdiction. Past financial performance is no guarantee of future results.

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.

Investors should carefully consider the investment objectives, risks, charges and expenses of a fund before investing. To obtain a summary prospectus or prospectus for this and other information, visit harborcapital.com or call 800-422-1050. Read it carefully before investing.

This material does not constitute investment advice and should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy.

Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.

BlueCove Limited is a third-party subadvisor to the Harbor Scientific Alpha High-Yield ETF.

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Harbor Funds Distributors, Inc. is the Distributor of the Harbor Mutual Funds.
Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.
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Investing involves risk and the potential loss of capital.

Investors should carefully consider the investment objectives, risks, charges and expenses of a fund before investing. To obtain a summary prospectus or prospectus for this and other information, click here or call 800-422-1050. Read it carefully before investing.

All trademarks or product names mentioned herein are the property of their respective owners. Copyright © 2024 Harbor Capital Advisors, Inc. All rights reserved.