ADVISORY AGREEMENT APPROVALS—Continued
The Trustees considered the expertise of IR+M in managing assets generally and in the core plus strategy specifically, noting that IR+M managed approximately $1.3 billion in core plus assets out of a firm-wide total of approximately $89.0 billion in assets under management as of December 31, 2022. The Trustees also noted the experience of the Fund’s portfolio managers in this strategy.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $950 million, showed the Fund’s management fee was below the group median for the Institutional Class. The Broadridge data also showed that the actual total expense ratio of the Fund’s Institutional Class was below the group and universe medians. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 29, 2024. The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Disruptive Innovation Fund. The Trustees considered Harbor Disruptive Innovation Fund (inception date November 1, 2000), noting that, according to the Broadridge report, the Fund’s Institutional Class had underperformed its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2022. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns ranked in the second, third and third quartile, respectively, for the periods ended December 31, 2022. The Trustees also considered that the Fund had underperformed its primary benchmark, the S&P 500 Index, for the one-, three- and five-year periods ended December 31, 2022.
The Trustees noted the fact that 4BIO Partners LLP (“4BIO Capital”), NZS Capital, LLC (“NZS Capital”), Sands Capital Management, LLC (“Sands Capital”), Tekne Capital Management, LLC (“Tekne”), and Westfield Capital Management Company, L.P. (“Westfield Capital”) had been appointed as the Fund’s subadvisers effective September 1, 2021 and that performance prior to that date is not attributable to 4BIO Capital, NZS Capital, Sands Capital, Tekne, and Westfield Capital. The Trustees further noted that, prior to that date, the Fund was compared to a different benchmark index. The Trustees considered the expertise of 4BIO Capital, NZS Capital, Sands Capital, Tekne, and Westfield Capital in the strategies for which they provide model portfolios.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $125 million, showed that the Fund’s contractual management fee was below the group median for the Institutional Class. The Broadridge data also showed that the actual total expense ratio for the Fund’s Institutional Class was below its group and universe medians. The Trustees also considered that Harbor Capital had agreed to a contractual fee waiver/expense reimbursement arrangement with the Fund until at least February 29, 2024. The Trustees noted that Harbor Capital’s profitability in operating the Fund was negative.
Harbor Diversified International All Cap Fund. The Trustees considered Harbor Diversified International All Cap Fund (inception date November 2, 2015), noting that, according to the Broadridge report, the Fund’s Institutional Class had outperformed its Broadridge group and universe medians for the one-, three- and five-year periods ended December 31, 2022. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns ranked in the second quartile for the periods ended December 31, 2022. The Trustees also considered that the Fund had outperformed its benchmark, the MSCI All Country World Ex. U.S. (ND) Index, for the one-, three- and five-year periods ended December 31, 2022.
The Trustees considered the expertise of Marathon Asset Management Limited (“Marathon-London”) in managing assets generally and in the strategy used with respect to the Fund specifically, noting that Marathon-London managed approximately $4.3 billion in assets in this strategy, out of a firm-wide total of approximately $38.5 billion in assets under management. The Trustees also noted the experience of the Fund’s portfolio managers in this strategy.
The Trustees observed that the Broadridge comparison of contractual management fees for the Fund’s expense group, assuming an asset level of $825 million, showed the Fund’s management fee was below the group median for the Institutional Class. The Broadridge data also showed that the actual total expense ratio for the Fund’s Institutional Class was below the group median and equal to the universe median. The Trustees also considered that Harbor Capital had agreed to continue the Fund’s existing contractual fee waiver/expense reimbursement arrangement until at least February 29, 2024.The Trustees noted that Harbor Capital’s profitability in operating the Fund was not excessive.
Harbor Global Leaders Fund. The Trustees considered Harbor Global Leaders Fund (inception date March 1, 2009), noting that, according to the Broadridge report, the Fund’s Institutional Class had underperformed its Broadridge group and universe medians for the one- and three-year periods ended December 31, 2022 and outperformed its Broadridge group and universe medians for the five-year period ended December 31, 2022. The Morningstar data presented showed that the Fund’s one-, three- and five-year rolling returns ranked in the third, fourth, and second quartile, respectively, for the periods ended December 31, 2022. The Trustees considered that the Fund had underperformed its benchmark, the MSCI All Country World (ND) Index, for the one- and three-year periods ended December 31, 2022 and outperformed the benchmark for the five-year period ended December 31, 2022.
