uploads///Portfolio Breakdown of the HCAIX

Analyzing the Harbor Capital Appreciation Fund’s 2015 Holdings

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Jan. 21 2016, Updated 7:12 p.m. ET

Harbor Capital Appreciation Fund

The Harbor Capital Appreciation Fund – Investor Class (HCAIX) “invests primarily in equity securities, specifically U.S. 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:

  • 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 62 holdings (stocks, bonds, and cash) as of December 2015, and it was managing assets worth $27.3 billion as of the end of December. As of December, its equity holdings included Nike (NKE), Bristol-Myers Squibb (BMY), Adobe Systems (ADBE), Boeing (BA), and LinkedIn (LNKD), comprising a combined 10.9% of the fund’s portfolio.

Historical portfolios

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

The fund is heavily invested in the information technology and consumer discretionary sectors. The two sectors together form 69% of the fund’s portfolio and are the top two sectors in the fund’s portfolio. The healthcare sector is a distant third and the only other sector whose portfolio weight is above 10%. The fund is not invested in the telecom services and utilities sectors.

Compared to December 2014, the top two sectors have seen their respective weights increase in the portfolio as of December 2015. Healthcare used to form over a fifth of the fund’s total assets a year ago, but it forms a little over 17% at present. On the other hand, the fund has reduced exposure to industrials to a third of what they used to be a year ago. A fall in energy prices has led to one stock being liquidated from the energy sector and others seeing a sharp fall in valuation.

How has the fund’s portfolio positioning impacted its 2015 returns? Let’s look at that in the next article.

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