The Harbor International Compounders ETF (OSEA) may be a compelling fund to consider right now.
OSEA works to remove home country bias and, according to our research, is outpacing markets in the current environment. The active ETF focuses on companies that are believed to be able to sustain consistent growth levels well into the future.
OSEA can serve as foreign large growth exposure in well-diversified portfolios. We believe the fund’s distinct concentrated portfolio and benchmark-agnostic approach set it apart from category peers, offering advisors greater versatility compared to more broadly diversified funds that either track an index or take more conservative bets. OSEA offers concentrated exposure, holding 37 securities as of March 31, 2023.
“Demand for international equity ETFs remains strong, but it is important to recognize not all stocks will perform in-line with one another,” Todd Rosenbluth, head of research at VettaFi, said. “A fundamental approach that seeks out the best ideas can have merit to complement a broad market approach.”
Security selection is done by OSEA subadvisor C WorldWide Asset Management’s investment team, which seeks to identify high-quality companies with consistent recurring revenues, stable free cash flows, and sustainable returns on invested capital. As part of its selection process, the investment team evaluates potential constituents by assessing each company’s business model, management, and financial and valuation metrics, among other things.
C WorldWide’s quality active management has worked to demonstrate its ability to generate strong returns and outperform benchmark indexes.
OSEA is outpacing the benchmark MSCI All Country World Ex. US Index by 528 basis points year-to-date1. The figures are looking at the total return level (using the closing price of the security that has been adjusted to include price appreciation, dividend, and distribution).
Since OSEA’s inception on September 7, 2022, the fund has returned 24.44% (NAV), while the benchmark has climbed 14.78% (NAV), each on a total return basis, calculated as described above. During the same period, the S&P 500 has gained just 3.41% (NAV).
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1 As of April 25, 2023.
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.
All investments involve risk including the possible loss of principal. 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: OSEA
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.
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. Investing in international and emerging markets poses special risks, including potentially greater price volatility due to social, political and economic factors, as well as currency exchange rate fluctuations. These risks are more severe for securities of issuers in emerging market regions. A non-diversified Fund may invest a greater percentage of its assets in securities of a single issuer, and/or invest in a relatively small number of issuers, it is more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio.
The S&P 500 Index is an unmanaged index generally representative of the U.S. market for large capitalization equities. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
The MSCI All Country World Ex. US (ND) Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global developed and emerging markets, excluding the U.S. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
Diversification in an individual portfolio does not assure a profit.
Home country bias refers to investors favoring companies from their own country over those from other countries or regions.
Free cash flow represents the cash a company can generate after accounting for capital expenditures needed to maintain or maximize its asset base.
A basis point is one hundredth of 1 percentage point.
C Worldwide is a third-party subadvisor to the Harbor International Compounders ETF
This article was prepared as Harbor Funds paid sponsorship with VettaFI.
Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.
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