Harbor Capital Advisors of Chicago, which manages $62 billion in active strategies, is switching gears, having opened six exchange traded funds in September. The goal is to mitigate the type of volatility that has been disconcerting to investors who have invested in high-beta funds such as the the ARK Innovation ETF.
Gleich focused on the Harbor Disruptive Innovation ETF INNO , which was established in December. The new ETF has only about $6 million in assets, but Harbor is running a total of $300 million under the same strategy, which also includes the Harbor Disruptive Innovation Fund HIMGX . — Kristof Gleich of Harbor Capital Advisors But some of the same stocks that performed so well early in the coronavirus pandemic crash-and-recovery cycle have since tumbled down to earth. Here’s a chart showing ARKK’s return and that of the SPDR S&P 500 ETF SPY from the end of 2019 through Feb. 25:
When discussing how investors can react to the higher volatility of a concentrated investment strategy, Gleich said: “If there is one thing we have learned about investing, it is that clients tend to bail at the worst time.” INNO is designed to hold between 90 and 100 stocks. It is co-managed by Gleich and Spenser Lerner using Harbor’s own “systematic and quantitative approaches” to asset allocation and risk management. But for the individual stock selections, the ETF’s managers rely on five other firms with varying specialties:
Gleich said Harbor has “a short list of other managers” it could bring into the INNO fold to broaden its holdings and exposure, and thus increase opportunity and reduce risk, if it were to grow very large.