Due Diligence Deep Dive - Adela Ghinet, CFA®, CAIA®

What led you to this field?

Although I studied economics and mathematics, I was admittedly unaware of the science and art of manager analysis in my college days. I understood that building a portfolio most likely to achieve one’s financial goals required getting two main things right: identifying the right asset allocation and implementing it. My manager research experience and pursuit of alpha began with an internship where I was tasked with identifying exceptional investment managers, a craft I was immediately drawn to.

What’s a resource you rely on for keeping on top of investment trends or best practices in the world of manager research and evaluation?

We enjoy and benefit from a wide, powerful network of investment professionals, academics, and researchers. This network helps us to understand emerging trends, debate views, and capture valuable inputs into our processes, including our own proprietary asset allocation and business cycle models. We are also big data consumers and enjoy digging deep into what managers are doing (beyond what they’re telling us) to help better distinguish between skill and luck. While there is no magic formula to find alpha, we dedicate ourselves to a rigorous discipline of research while maintaining an open, creative mind.

How do you stay on top of what managers are out there?

You can think of it like a mosaic. We start once more with our powerful network (which we believe gives us an edge), as well as industry publications, podcasts, and databases such as eVestment and Morningstar Direct. We’re keen on engaging boutiques and managers who hang their own shingle. If we’ve missed you, please reach out to me at adela.ghinet@harborcapital.com!

How has the manager research, due diligence, or product interest changed since you’ve been in this industry?

The quest for the highest-quality investment managers has become much more scientific, I believe. This is owed to the availability of more, varied types of data, and ensuing empirical evidence. This matters because the noise to signal ratio is very high, with the former dominating. My goal is to focus on what is the ultimate signal.

What do you believe is an often-overlooked area of portfolio construction and due diligence?

Intangibles play an important role here and we are big believers in measuring what truly matters and not necessarily what is simple. A world-class culture has a big bearing on alpha generation and stability. We deliberately look for evidence of a culture of continuous improvement, psychological safety, transparency, introspection, and avant-garde thinking, particularly as the competition for alpha gets stronger every year.

What does “hidden gem” mean to you?

A manager that has properly aligned incentives with their clients, an investment centric culture, and a disciplined near-obsession for investing – motivated to look for something compelling, non-consensus, and (hopefully) also correct over the stated investment horizon. I like stable teams who want to win using a process with a clear substantiated edge, are mindful of capacity considerations, and invest with conviction using a discernable advantage that is repeatable over the long run.

How do you define success when it comes to selecting a manager or launching a product?

We are fiduciaries first and foremost. The best managers will add true idiosyncratic alpha over a market cycle and do so consistently and in a risk-aware way. Caveat: there is no silver bullet – you have to roll up your sleeves to tilt the odds in your favor, particularly as we all make decisions with imperfect information and subsequently tend to have perfect hindsight. Performance alone is not, in my opinion, an indicator of a “best of breed” manager.

What do you love most about your job?

Beyond the dedicated, passionate people I am lucky to work with every day, I believe our industry is vibrant, requiring continuous learning and passion for problem solving. If you have an open mind and are intellectually curious, you can always improve. Importantly, knowledge compounds over time!

Harbor Capital Advisors

Harbor Capital Advisors is an asset manager known for curating an intentionally select suite of active ETFs from boutique managers. Advisors looking for distinct and differentiated investment options for their clients’ portfolios often connect with our passionate obsession to find what we believe to be the best – bold solutions that have the potential to produce compelling, risk-adjusted returns.

For more information, visit www.harborcapital.com.

Important Information

Investing entails risks and there can be no assurance that any investment will achieve profits or avoid incurring losses.

These views are not necessarily those of the Harbor Investment Team and should not be construed as such. Financial Professionals should consult directly with your firm’s compliance department to obtain precise advice based on their policies, procedures, and any industry-specific regulations.

3218286