Competitive Edge Investing

From this week's edition of PBS's WealthTrack comes some prudent advice on how to manage investments in this turbulent market that started in January and just doesn't want to go away. $100B has left mutual funds and $200B has migrated to index funds. In this program, Harbor Capital Advisors President Kristof Gleich discusses how to use actively managed ETFs to gain an edge.  Hope everyone had a great weekend.  

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Sponsored by: May 20, 2022 Dear WEALTHTRACK Subscriber, 2022 has been a rough year for investors as financial markets have declined across the board. No matter what the market performance, investors continue to favor passive index funds over actively managed ones.  More than $100 billion left actively managed mutual funds in the first three months of the year, the worst outflows since the first quarter of 2020. In contrast, lower cost index funds took in over $200 billion in new money.  Investors continue to favor ETFs, exchange-traded funds over mutual funds. The vast majority of funds in ETFs are in passive strategies, but there’s an interesting divergence occurring. One of the fastest growing segments in the ETF universe is actively managed ETFs. They reached a record $453 billion globally, up 3.4% in the first quarter with net inflows of nearly $33 billion, the second highest on record.  This week’s guest is involved in both actively managed mutual funds and ETFs, and one of his main responsibilities is identifying best in class managers for both. He is Kristof Gleich, President and Chief Investment Officer of Harbor Capital Advisors. Prior to joining the firm in 2018 he was Global Head of Manager Selection at JP Morgan Chase.  Harbor Capital is well known within the investment management industry but not in the general public. Begun as the pension advisory arm of old line packaging manufacturer, Owens-Illinois, Harbor Capital became independent over 30 years ago. It is known for choosing top quality independent money managers to run specific mutual funds under the Harbor Capital name.  It currently oversees $55 billion of targeted strategies which include 16 equity mutual funds and five fixed income funds. It also recently launched a suite of actively managed ETFs, some with unusual strategies which we will discuss.    I began the interview by asking Gleich to take us through the process of choosing money managers to partner with, who have what he calls an “alpha edge”.       In this week’s EXTRA feature, Gleich explains how majoring in physics has helped his investment career.   If you miss the show on public television, you can watch it on our website over the weekend. You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify. Have a great weekend, and make the week ahead a healthy, profitable and productive one! Best regards, Consuelo