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WINN’s Triumphs in the Face of Inflation

August 25, 2023

Since the inception of the Harbor Long-Term Growers ETF (WINN), elevated inflation has served as a source of pressure on operating margins. In fact, operating margins for a number of U.S. indices spanning a range of investment styles declined for the period covering the inception date of the Fund through 7/31/2023 as exhibited below:

Source: FactSet Research Systems, August 2023

However, amidst this period of elevated inflation and deteriorating economic conditions, WINN demonstrated fundamental resiliency, actually delivering an over 11% positive change in operating margins growth, compared to a more than 5% operating margin weakening for its benchmark, the Russell 1000 Growth. Notably, the S&P 500 Index (-4.6%), the Russell 1000 Value Index (-6.4%) and the Russell 2000 Growth (-26.0%) also experienced operating margin declines for the reporting period outlined previously. In our view, WINN’s aggregate operating margin expansion highlights the Fund’s mix shift towards companies with enhanced pricing power and profitability profiles throughout 2022 and 2023. All things considered, we find it important to recognize the benefits of active management during periods of challenging macro phenomenon, such as long stretches of heightened interest rates, during which passive investments are unable to adjust as quickly as active managers. To be sure, we cannot predict what the future holds. However, we point to Jennison Associates’ tenured management team and steadfast process as value additive for investors during periods of uncertainty and adjustment.

Important Information

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.

Investing involves risk, principal loss is possible. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value. 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.

The views expressed herein are those of Harbor Capital Advisors, Inc. investment professionals. They may not be reflective of current opinions, are subject to change without prior notice, and should not be considered investment advice.

The Standard & Poor’s (S&P) 500 Index is an unmanaged index generally representative of the U.S stock market. The Russell 1000® Growth Index is an unmanaged index generally representative of the U.S market for larger capitalization growth stocks. The Russell 1000® Growth Index and Russell® are trademarks of Frank Russell Company. The Russell Midcap Growth Index is a market capitalization-weighted index comprised of 800 publicly traded U.S. companies with market caps of between $2 and $10 billion. The Russell 2000 Growth Index is a market capitalization weighted index that measure the performance of small-cap growth companies. The Russell 1000 Value Index is a stock market index that measures the performance of the large-cap value segment of the U.S. equity universe. The Russell Midcap Value Index is a market capitalization weighted index that measures the performance of midcap value segment of the U.S. equity market. The Russell 2000 Value Index is a stock market index that measures the performance of the small-cap value segment of the U.S. equity universe. These unmanaged indices do not reflect fees and expenses and are not available for direct investment.

Operating margins measure how much profit a company makes on a dollar of sales after paying for variable costs of production, such as wages and raw materials, but before paying interest or tax.

Jennison Associates is the subadvisor for the Harbor Long-Term Growers ETF.



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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.

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