uploads///Portfolio Break down of the HCAIX

November Status Report: the Harbor Capital Appreciation Fund


Nov. 20 2015, Published 1:35 p.m. ET

Harbor Capital Appreciation Fund

The Harbor Capital Appreciation Fund Investor Class (HCAIX) “invests primarily in equity securities, specifically US companies with market capitalizations of at least $1 billion at the time of purchase.” The fund managers meet the top management of the companies on their radar and claim to invest in those companies that they believe have the following:

  • strong balance sheets and earnings performance
  • sales momentum and growth outlook
  • high profitability history or potential
  • unique market position
  • a capable and committed management team

Managers adopt a bottom-up approach while selecting securities for the portfolio. The fund’s website also claims that “the fund stays fully invested in stocks and does not try to time the market, but instead works toward steady investment growth.”

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The fund’s assets were invested across just 63 holdings (stocks, bonds, and cash) as of September 2015 (the latest available), and it was managing assets worth $27.53 billion as of the end of October. Its September portfolio equity holdings included NIKE (NKE), Netflix (NFLX), Adobe Systems (ADBE), The Boeing Company (BA), and Biogen (BIIB), which make up a combined 11.2% of the fund’s portfolio.

Historical portfolios

For this analysis, we will be considering holdings as of September 2015, as this is the latest available sectoral breakdown with us. The fund’s holdings after September reflect valuation-driven changes to the portfolio, not the actual holding.

Information technology and consumer discretionary sectors form a combined 67% of the fund’s portfolio and are the top two sectors invested in by the fund, in that order. The healthcare sector forms a little over 17% of the fund’s assets, making it the third-largest sector.

Further portfolio changes

Over the one-year period that ended in October 2015, fund managers have increased exposure to the consumer discretionary, financials, and information technology sectors. On the other hand, exposure to the energy, healthcare, and industrials sectors were reduced during this period. The fund does not have any investments in the telecom services and utilities sectors.

Except for in a few cases, the fund managers have been quite consistent with their stock picks and have stuck with their choices. But how has the fund’s portfolio positioning impacted its returns? Continue to the next part of this series to find out.


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