Harbor Capital Advisors has launched a new actively managed ETF delivering a liquid alternatives strategy by systematically going long and short on US large-cap equities.
Kristof Gleich, President and CIO of Harbor Capital Advisors.
The Harbor Long-Short Equity ETF (LSEQ US) has been listed on NYSE Arca with an expense ratio of 1.70%.
Alternative investments can offer diversification benefits when added to conventional stock/bond portfolios, helping to improve risk-adjusted returns.
Liquid alternatives – alternative investment strategies made available to the retail market – come with many benefits including easier entry points in terms of initial investment, regulated transparency and reporting requirements, and limits on the amount of total leverage used.
Long-short equity strategies, in particular, may appeal to stock investors who desire a greater focus on downside risk management.
Investment approach
Managed by Boston-based investment advisor Disciplined Alpha, the fully transparent fund invests in large and mid-cap stocks within the Russell 1000 Index universe and will typically have a net long exposure ranging from 40% to 60%; however, this may increase to as high as 150% long, according to the ETF’s prospectus document.
Disciplined Alpha employs a structured quantitative approach that includes the use of a proprietary macroeconomic regime model to determine gross and net exposure, as well as weights for value, neutral, or momentum factors.
The firm also prioritizes industry groups perceived to offer substantial alpha opportunities. Within these groups, the long model incorporates proprietary stock selection factors derived from discussions with company management and third-party fundamental analysts.
Commenting on the new listing, Kristof Gleich, President and CIO of Harbor Capital Advisors, said: “We’re excited to be able to launch the Harbor Long-Short Equity ETF and provide clients with another active, concentrated, and fully transparent option to consider for their portfolio construction. We at Harbor stand firm on our belief that active managers need to be truly active to add value. We’re also thrilled to partner with Disciplined Alpha LLC. Their creative and innovative research approach, systematic processes, and disciplined implementation have enabled them to manage and develop investment strategies to meet the needs of qualified institutional investors all around the globe.”