HCAIX Performs Superbly in 2015: How Will It Do This Year?



The Harbor Capital Appreciation Fund: Overview

The Harbor Capital Appreciation Fund – Investor Class (HCAIX) had $25.1 billion worth of assets under management at the end of January 2016. As of December 2015, its assets were spread across 62 holdings and included stocks of NIKE (NKE), Bristol-Myers Squibb (BMY), Adobe Systems (ADBE), The Boeing Company (BA), and LinkedIn (LNKD), which comprise a combined 10.9% of the fund’s portfolio.

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The Harbor Capital Appreciation Fund’s performance

From a purely NAV (net asset value) return standpoint, the HCAIX fell as much as the S&P 500 in the year ended February 12, 2016. For the month of January, the HCAIX was one of two funds among the 12 focused on in this series to post a rise, and in 2015, It was one of only two funds to post double-digit gains.

Other metrics

The HCAIX’s standard deviation, or the volatility of returns, in the one-year period ended February 12 was 19.0%. This was much higher than the S&P 500’s 16.4%, and higher than the peer group’s average of 18.6%.

The fund’s risk-adjusted returns, calculated by the Sharpe ratio, amounted to -0.45, a shade better than the S&P 500’s -0.47 for the one-year period ended February 12. For 2015, the fund’s risk-adjusted returns were the best among its peers and much better than the index’s. The fund’s comparatively low volatility in 2015 helped it post a strong risk-adjusted performance. However, the fund has experienced very high volatility so far in 2016, which has been reflected in its Sharpe ratio.

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The information ratio, calculated with the S&P 500 as the benchmark, was -0.15 for the one-year period ended February 12. Although it was negative, it scored better than eight of its peers. The information ratio measures the fund manager’s consistency and ability to generate excess returns over a benchmark. For 2015, the fund had the best information ratio among its peers.

A note to investors

Volatility has been detrimental to the fund’s risk-adjusted performance in 2016. This is an aspect of the fund that both investors and potential investors should be aware of. However, apart from that, the fund’s metrics look good and show capable management. Investors for the long term could consider this fund for their shortlist. In the next article, we’ll look at the MainStay Large Cap Growth Fund – Investor Class (MLINX).


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