ContactHarbor Active Small Cap ETF Strategy Profile
September 03, 2024Table of Contents
- Talented, experienced management. Portfolio Manager Glenn Gawronski has amassed over two decades of experience in investment management, bringing his knowledge to launch Byron Place in 2015. Harbor teamed up with this experienced PM to offer the Harbor Active Small Cap ETF (SMLL) and afford compelling access to a tenured approach.
- Disciplined, common-sense1 investing. SMLL aims to invest only in businesses with sustainable competitive advantages run by competent management teams that are good stewards of capital with a track record of success. Candidates for inclusion in SMLL must also trade at a discount to their intrinsic value.
- Attractive risk-adjusted potential returns. Byron Place specializes in equity investing with a narrowed focus on providing attractive risk-adjusted returns over a market cycle with an emphasis on downside mitigation.
- Cost-effective active approach. Harbor's Active Small Cap ETF affords access to a tenured investment manager and process with a total expense ratio of 80 basis points (bps) for a low-cost active ETF in the small cap blend space.
| Ticker Symbol | SMLL |
|---|---|
| Cusip | 41151J752 |
| Total Expense Ratio | 0.80% |
| Inception Date | 08/28/2024 |
| Listing Date | 08/29/2024 |
| Manager Name | Byron Place Capital Management, LLC |
| Listed Exchange | NYSE |
| Active/Passive | Active |
| Benchmark | Russell 2000 Index |
| Lead Market Maker | Virtu |
| Morningstar Category | Small Cap Blend |
The Harbor Active Small Cap ETF managed by Byron Place Capital Management and led by portfolio manager Glenn Gawronski offers a distinct opportunity to access the small cap blend space through an active ETF structure. Gawronski, with over two decades of experience, has a proven track record of managing a $4 billion+ U.S. equity franchise at JP Morgan.
SMLL seeks to offer what we believe is a cost-effective, transparent, and tax-efficient way for advisors to access the small cap blend space with an active strategy positioned to capitalize on the asset class's inherent inefficiencies and wide dispersion of returns. It also provides investors access to Gawronski's approach, which is based on disciplined, common-sense1 investing and risk mitigation.
- Cost Effective: SMLL offers a cost-efficient way to access a tenured investment manager.
- Liquid: The ETF can be traded throughout the day, providing intra-day liquidity for shareholders.
- Tax-efficient: Due to the in-kind exchange of shares, the ETF structure allows for greater tax efficiency and reduced costs.
- Transparent: The availability of daily holdings allows investors to make more informed investment decisions.
1 1 Byron Place offers what they refer to as a 'common sense approach', meaning their approach is active, scalable, transparent, and they believe straightforward given other more complex investment processes.
Byron Place Capital Management specializes in disciplined, common-sense investing in publicly traded equity markets. Byron Place offers what they refer to as a 'common sense approach', meaning their approach is active, scalable, transparent, and they believe straightforward given other more complex investment processes. Their investment process with SMLL is focused on identifying small cap stocks that meet their investment criteria and constructing a diversified portfolio. SMLL follows the same approach that Gawronski has applied successfully for over 20 years, which involves screening, fundamental and valuation analysis, and sell discipline. At its core, SMLL seeks to buy businesses with sustainable competitive advantages, competent management teams, and attractive valuations.
SMLL employs an active management approach that uses a proprietary bottom-up analysis to identify approximately 30 to 80 small cap companies that it believes have competitive advantages, durable business models, sustainable free cash flow generation and attractive returns on invested capital for inclusion in the Fund's portfolio. Simply put, SMLL seeks total return by providing small cap equity exposure with an elevated focus on attractive risk-adjusted returns and downside mitigation.
- Companies with competitive advantages, durable business models, sustainable free cash flow generation, and attractive returns on invested capital
- Management teams that have a track record of success, are good stewards of capital, and are committed to increasing shareholder value
- Stocks that are trading at a discount to their intrinsic value
Byron Place Capital Management is an investment management firm specializing in equity investing. They were founded in 2015 by Glenn Gawronski, a former portfolio manager at JP Morgan who co-managed the JP Morgan Small Cap Equity Fund (VSEIX). Byron Place specializes in equity investing with a focus on quality businesses with competitive advantages, competent management, and attractive valuations. Their mission is to provide attractive risk-adjusted returns for clients with an emphasis on downside mitigation.
Important Information
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. 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. 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, and it is more susceptible to risks associated with a single economic, political or regulatory occurrence than a more diversified portfolio.
ETFs are subject to capital gains tax and taxation of dividend income. However, ETFs are structured in such a manner that taxes are generally minimized for the holder of the ETF. An ETF manager accommodates investment inflows and outflows by creating or redeeming “creation units,” which are baskets of assets. As aresult, the investor usually is not exposed to capital gains on any individual security in the underlying portfolio. However, capital gains tax may be incurred by the investor after the ETF is sold.
The Russell 2000® Index measures the performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000® and includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000® Index and Russell® are trademarks of Frank Russell Company. This unmanaged index does not reflect fees and expenses and is not available for direct investment.
A basis point is one hundredth of 1 percentage point.
Intrinsic value is the perceived or calculated true worth of an asset, security, or company based on its fundamental characteristics, independent of its current market price.
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.
Foreside Fund Services, LLC is the Distributor of the Harbor Active Small Cap ETF.
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