Harbor Capital Advisors has expanded its ETF lineup with an actively managed multi-asset strategy.
The Harbor Multi-Asset Explorer ETF (MAPP), listed September 14 on the NYSE Arca, seeks to provide long-term total return while aiming to limit downside risk. MAPP invests in a diversified portfolio of liquid and low-cost ETFs, providing exposure to broad asset classes. This includes equities, fixed income, REITs (real estate investment trusts), commodities, and cash and cash equivalents.
“Harbor has continued to bring innovative, actively managed ETFs to market to meet advisors’ needs,” Todd Rosenbluth, head of research at VettaFi, said. “This new strategy will help ETF-minded advisors uncertain about how to adjust allocations in a rapidly shifting environment.”
MAPP is actively managed by Harbor’s Multi-Asset Solutions Team. The team uses a systematic approach to dynamically shift the portfolio’s risk. The return profile based on where the economy and markets are in the business cycle.
Harbor's Multi-Asset ETF Responds to the Current Economic and Market Environment
MAPP utilizes a proprietary systematic framework that analyzes over 70 macro-economic and market-price variables related to growth, liquidity, and inflation (GLI) to identify the current business cycle regime, according to Harbor. The five regimes include early cycle, mid cycle, late cycle risk seeking, late cycle risk averse, and contraction.
The business cycle regime dictates MAPP’s asset allocation across stocks, bonds, credit, and commodities. It also dictates the strategy’s targeted volatility profile.
Currently, the U.S. is in a late cycle risk-seeking regime, according to Harbor. Growth levels are elevated but falling, inflation is high, liquidity conditions are tightening, and investors have a risk-seeking mentality. Harbor believes this regime is typically favorable for risk assets.
The U.S. economy and capital markets transitioned into the current regime in November of 2022, per Harbor. Previously, in 2022, the systematic framework identified a late cycle risk-averse regime. That regime reflects similar growth, liquidity, and inflation dynamics. However, investors have a risk-averse mentality, Harbor believes, leading to headwinds for risk-assets.
“It is also important to note that the probability of a ‘contraction’ regime is elevated relative to history, although it is not the dominant regime in our framework at the present time,” Harbor said. “Our systematic framework continues to monitor closely the evolution of macro-economic and market-price data to detect if we are transitioning into a ‘contraction’ regime, and if that occurs our portfolio will favor defensive assets such as core bonds/duration, cash and gold, and our allocations to equities may drop from.”
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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.
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.
Please refer to the Fund’s prospectus for additional risks associated with the Fund. For the Fund’s prospectus, holdings, and most current standardized performance, please click: MAPP
All investments involve risk including the possible loss of principal. 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.
There is no guarantee that the investment objective of the Fund will be achieved. The Fund is a fund of funds and is subject to the expenses and risks of the underlying funds, including but not limited to risks associated with: commodities; derivatives; fixed income securities, including “high-yield” or “junk” bonds; foreign issuers/foreign markets, U.S. government securities; mortgage- and asset-backed securities; REITs; and small companies. The Fund’s investment performance depends upon the successful allocation by the Advisor of the Fund’s assets among asset classes, geographical regions, sectors and specific investments.
The Advisor’s judgment about the attractiveness, value and growth potential of a particular asset class, region, sector or investment may be incorrect and the Advisor’s selection of the underlying funds to implement its asset allocation decisions may not produce the desired results. The Fund utilizes a quantitative model and there are limitations in every quantitative model. There can be no assurances that the strategies pursued or the techniques implemented in the quantitative model will be profitable, and various market conditions may be materially less favorable to certain strategies than others.
Foreside Fund Services, LLC is the Distributor of the Harbor Multi-Asset Explorer ETF.