Harbor Active Small Cap ETF Q4 2025 Commentary
The Harbor Active Small Cap ETF provides small cap equity exposure with a narrowed focus on attractive risk-adjusted returns with downside mitigation. During the second quarter of 2025, SMLL ETF returned 3.35% (NAV), underperforming the Russell 2000® Index, which returned 8.50%. We will see what volatility/opportunities quarterly earnings may bring us, but we anticipate that we will be a bit less active, given all the recent activity and volatility.
| ARCA Exchange | US Country |
The investment strategy is designed to offer investors a way to gain leveraged exposure to the performance of the Russell 2000 Index, which is a benchmark for approximately 2,000 small-cap companies within the Russell 3000 Index. This investment product aims to deliver daily results that are 200% of the daily performance of the Russell 2000 Index, before fees and expenses. To achieve its investment objective, the fund predominantly invests in financial instruments such as swap agreements, securities of the index, and ETFs that track the index. It also employs leverage through borrowing for investment purposes. The fund is characterized by its non-diversified status, meaning it may focus its investments more narrowly than diversified funds.
This product seeks to provide investors with twice the daily performance of the Russell 2000 Index. Leveraged investments can potentially amplify returns for investors who are bullish on the performance of small-cap companies within the U.S. stock market.
As part of its strategy, the fund invests at least 80% of its net assets in a mix of financial instruments that include swap agreements, securities of the Russell 2000 Index, and ETFs that track the index. These investments are selected to achieve the fund's goal of leveraged exposure to the index.
In addition to investing in financial instruments and ETFs, the fund also employs borrowing as a strategy to achieve its investment objectives. The use of borrowed money can increase the fund's exposure to the index and potentially enhance returns on invested capital.
The non-diversified status of the fund allows it to make more concentrated investments than a diversified fund. While this can lead to greater volatility and risk, it may also offer the opportunity for higher returns due to the focused investment approach.