Harbor Active Small Cap ETF: Competitively Advantaged Businesses Remain Core Positions In Q3 2025
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Harbor Capital Advisors45 FollowersFollow5ShareSavePlay(14min)CommentsSummaryDuring the third quarter of 2025, the Harbor Active Small Cap ETF ("ETF") returned 0.24% (NAV), significantly underperforming the Russell 2000® Index, which returned 12.39%.What worked is the exact opposite of the factors that we have consistently been exposed to throughout a long investment career.We are looking to take advantage of the volatility and will likely increase our exposure to competitively advantaged businesses. niphon/iStock via Getty Images The following segment was excerpted from the Harbor Active Small Cap ETF Q3 2025 Commentary. The following segment was excerpted from the Harbor Active Small Cap ETF (SMLL) Q3 2025 Commentary. During the third quarterThis article was written byHarbor Capital Advisors45 FollowersFollowHarbor Capital is an asset manager focused on curating an intentionally select suite of active ETFs that they believe have the potential to produce compelling, risk-adjusted returns within a portfolio. Note: This account is not managed or monitored by Harbor Capital, and any messages sent via Seeking Alpha will not receive a response. For inquiries or communication, please use Harbor Capital's official channels.Quick InsightsWhat drove SMLL’s significant underperformance versus the Russell 2000 in Q3?SMLL’s quality and fundamentals-driven approach lagged as the market favored speculative, low-ROE, high-beta, and unprofitable stocks, which are underrepresented in the ETF.How is SMLL positioning for future volatility and earnings season?SMLL plans to leverage upcoming volatility and earnings reports to selectively increase exposure to competitively advantaged companies with proven management teams and discounted valuations.What valuation metrics are highlighted for recent portfolio additions like CarMax and Morningstar?CarMax was added at 11x 2026 EPS, seen as undervalued versus peers, while Morningstar trades near 4x revenue for a 30%+ EBITDA margin business, both considered attractive entry points.Recommended For You