Harbor Capital Advisors Expands Growing ETF Lineup with the Harbor AlphaEdge Small Cap Earners ETF
Harbor Capital Advisors has introduced the Harbor AlphaEdge Small Cap Earners ETF (EBIT) to its ETF lineup. This ETF is designed for advisors seeking small cap investments with a focus on profitability. Unlike the Russell 2000 Index, EBIT excludes unprofitable companies, aiming for a more profitable portfolio. This approach addresses growing client concerns about the lack of profitability in small cap stocks. EBIT targets advisors who want small cap exposure without the worry of unprofitable companies, potentially offering better returns. EBIT aims to deliver investment results matching the Harbor AlphaEdge Small Cap Earners Index, before fees and expenses.
- Introduction of EBIT, a new ETF focused on profitable small cap companies.
- Addresses client concerns about the lack of profitability in small cap stocks.
- Potential for better returns by excluding unprofitable companies.
- None.
Insights
Harbor Capital Advisors' introduction of the Harbor AlphaEdge Small Cap Earners ETF (EBIT) reflects a growing trend among asset managers to refine investment strategies in response to market demands. By focusing on profitable small-cap companies, EBIT addresses a common concern among investors about the financial stability of small-cap stocks. This could potentially provide higher risk-adjusted returns compared to traditional small-cap indices like the Russell 2000, which includes many unprofitable companies.
Small-cap stocks typically carry higher volatility but also offer greater growth potential. By narrowing the selection to profitable entities, EBIT aims to reduce some of the inherent risks while maintaining the upside potential. This strategy can be particularly appealing in uncertain economic climates where profitability becomes a critical factor.
Nevertheless, it's important to consider the expense ratio and other associated costs of the ETF, as these can impact net returns. Overall, EBIT's focused approach may offer better capital appreciation potential for investors seeking exposure to small-cap stocks while mitigating some of the risks.
The launch of EBIT signifies Harbor Capital Advisors' proactive response to client feedback and market trends. By eliminating unprofitable companies from its investment universe, EBIT aligns with a growing investor preference for quality over quantity. This strategy can particularly attract investors wary of the volatility and risks associated with small-cap investing.
From a market perspective, the ETF's focus on profitability could make it stand out among other small-cap ETFs, potentially increasing its attractiveness. The emphasis on a 'straightforward, repeatable investment approach' suggests that EBIT aims to provide consistent returns while simplifying investment decisions for advisors.
However, it's important to recognize that while EBIT may offer a more stable investment, it could also miss out on high-growth opportunities from emerging small-cap companies that are not yet profitable. Investors should weigh the trade-offs between stability and growth potential when considering this ETF.
Why EBIT?
Harbor developed EBIT for advisors looking for small cap products that seek a distinctive approach in the pursuit of alpha potential. With EBIT, unprofitable companies are eliminated from the investment universe at the outset, with the goal of allowing for a narrowed focus on the most profitable1 small cap companies.
“In our conversations with clients, we have heard a consistent and growing concern around the lack of profitability of small cap companies that comprise the Russell 2000 Index. We built EBIT as a solution for advisors who are cautious about small caps given concerns about profitability levels,” said Kristof Gleich, President, and CIO at Harbor Capital Advisors. “We’ve responded with a straightforward, repeatable investment approach that we feel strongly has greater potential to generate immediate and long-term compelling returns for clients.”
Consider EBIT…
Gleich added, “EBIT is for advisors who understand the potential benefits of a small cap allocation to client portfolios but don’t have time to worry about the increasing lack of profitability in the small cap stock universe.”
Harbor has refined small cap exposure with EBIT by leaning into profitability in an effort to transform what an investment in the asset class looks like. Designed to allocate to profitable small caps, we think EBIT is well positioned to deliver improved investor returns in the small cap space.
The Harbor AlphaEdge Small Cap Earners ETF (Ticker: EBIT) seeks to provide investment results that correspond, before fees and expenses, to the performance of the Harbor AlphaEdge Small Cap Earners Index.
About Harbor Capital
Harbor Capital Advisors is an asset manager with an AUM of
1Profitable companies as defined by (1) median trailing 12-month operating margin (defined as operating profit divided by sales) over the prior 12 quarters greater than or equal to
Investors should carefully consider the investment objectives, risks, charges, and expenses of a Harbor 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.
Investing involves risk, principal loss is possible. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value. The ETF is new and has limited operating history to judge.
EBIT: 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. Stocks of small cap companies pose special risks, including possible illiquidity and greater price volatility than stocks of larger, more established companies. The Fund may not exactly track the performance of the Index with perfect accuracy at all times. Tracking error may occur because of pricing differences, timing and costs incurred by the Fund or during times of heightened market volatility. Harbor Capital Advisors, Inc. (the “Index Provider”) selects companies for the Index based on a proprietary methodology and there is no guarantee that the construction methodology will accurately provide the intended exposure. The Fund's assets may be concentrated in a particular sector or industries to the extent the Index is concentrated, which would subject the Fund to the risk that economic, political, or other market conditions that have a negative effect on that sector or industry will negatively impact the value of the Fund. There can be no assurance that the Fund will grow to or maintain an economically viable size, in which case the Board of Trustees may determine to liquidate the Fund.
The Russell 2000® Index is a small-cap
The Harbor AlphaEdge Small Cap Earners Index evaluates the performance of a specific subset within the small cap US Equity market. This subset comprises companies listed in the Russell 2000 Index that have met profitability criteria over the past twelve quarters. The index employs a modified profitability weighting methodology.
The constituents of the Russell 2000® Index were used by Harbor Capital Advisors, Inc. or its affiliate as the starting universe for selection of the companies included in the Harbor AlphaEdge Small Cap Earners Index. Frank Russell Company (“FTSE Russell”) does not in any way create, calculate, maintain, review, sponsor, support, promote or endorse the Harbor AlphaEdge Small Cap Earners Index. In no event shall any FTSE Russell party have any liability for any direct, indirect, special, incidental, punitive, consequential (including without limitation lost profits) or any other damages in connection with the constituents of the Harbor AlphaEdge Small Cap Earners Index.
Alpha is a measure of risk (beta)-adjusted return.
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 a recommendation to purchase a particular security.
Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.
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MEDIA CONTACTS:
Hedda Nadler – Hedda@mountandnadler.com
Andrew
Source: Harbor Capital Advisors, Inc.
FAQ
What is the new ETF introduced by Harbor Capital Advisors?
What makes EBIT ETF different from other small cap ETFs?
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