In the third quarter of 2025, the Harbor Long Term Growers ETF (WINN) achieved a 6.90% return (NAV), trailing the Russell 1000® Growth Index's 10.51%. This underperformance stemmed mainly from specific stock choices across Communication Services, Health Care, Consumer Discretionary, and Information Technology. A notable strategic move included initiating a position in Advanced Micro Devices (AMD), a leader in high-performance computing and AI solutions, signaling a focus on future growth opportunities. The absence of investment in the Materials sector positively influenced the ETF's results.
The ETF's strategic adjustments and sector exposures are the culmination of a thorough, bottom-up stock selection process, rather than a top-down macro view. Recent increases in Information Technology and reductions in Health Care holdings underscore a strong conviction in particular companies. The core philosophy emphasizes identifying growth opportunities through individual company merits, ensuring that portfolio composition dynamically reflects these targeted convictions.
Q3 2025 Performance and Underperformance Factors
During the third quarter of 2025, the Harbor Long Term Growers ETF recorded a net asset value (NAV) return of 6.90%. This figure indicates that the ETF did not match the performance of its designated benchmark, the Russell 1000® Growth Index, which delivered a stronger return of 10.51% over the same period. A significant portion of this underperformance can be traced back to the specific equity selections made within several key sectors. These included Communication Services, Health Care, Consumer Discretionary, and notably, Information Technology. Within these sectors, the chosen securities did not perform as well as expected relative to their peers or the broader market, thus negatively impacting the overall ETF returns. A substantial factor contributing to the underperformance was the fund's underweight allocation to the Information Technology sector, meaning it held a smaller proportion of its assets in this sector compared to the benchmark. This proved to be a disadvantage, as the Information Technology sector generally performed robustly. Conversely, one area where the ETF benefited was its lack of exposure to the Materials sector, which contributed positively to its relative performance.
The details of the third quarter reveal a challenging environment for the Harbor Long Term Growers ETF, as its 6.90% NAV return lagged significantly behind the Russell 1000® Growth Index’s 10.51%. The primary culprits for this disparity were the stock-picking decisions within several economically vital sectors. Specifically, investment choices in Communication Services, Health Care, Consumer Discretionary, and Information Technology were identified as the largest negative contributors. These selections, despite being growth-oriented, failed to capture the upside seen in the broader market for these sectors. Furthermore, the strategic decision to maintain a lower-than-benchmark allocation in Information Technology proved costly, given the strong rallies observed in many tech firms. This underweight position meant the ETF missed out on a substantial portion of the sector’s gains, exacerbating the performance gap. On a more positive note, the ETF’s strategic avoidance of the Materials sector proved beneficial, providing a partial offset to the underperformance experienced elsewhere. This highlights a mixed bag of results influenced by both individual stock performance and broader sector allocation decisions.
Strategic Portfolio Adjustments and Future Outlook
In a notable strategic move within the third quarter, the Harbor Long Term Growers ETF initiated a new investment in Advanced Micro Devices (AMD). This decision underscores a clear focus on companies at the forefront of technological innovation and high-growth areas. AMD is recognized as a dominant force in the high-performance computing and artificial intelligence (AI) solutions landscape. The inclusion of AMD in the portfolio reflects a proactive approach to capitalize on the burgeoning demand for sophisticated computing power, which is critical for advancements in AI, data centers, and advanced graphics. This investment is aligned with the ETF's mandate to seek out companies with strong growth prospects and leadership positions in their respective markets. The shift in portfolio composition, evidenced by this new position, signifies an adaptation to evolving market dynamics and an effort to position the ETF for future gains by tapping into powerful secular growth trends, particularly in technology.
The strategic adjustments implemented during the third quarter highlight the Harbor Long Term Growers ETF’s commitment to optimizing its portfolio for long-term growth and adapting to an evolving market. The most significant of these adjustments was the establishment of a position in Advanced Micro Devices (AMD). This move is a direct response to the increasing prominence of high-performance computing and artificial intelligence, areas where AMD holds a leading and innovative stance. By investing in AMD, the ETF aims to leverage the company’s strong market position and its potential for sustained growth driven by technological advancements and expanding market opportunities in AI and data processing. This decision reflects a forward-looking perspective, seeking to capture value from sectors demonstrating robust growth trajectories. These portfolio changes are not merely reactive but are part of a deliberate strategy to enhance the ETF's growth potential by focusing on companies with compelling competitive advantages and significant upside in dynamic industries.