Harbor Large Cap Value Fund Institutional Class (HAVLX)

Investment Strategy

The Fund invests primarily in equity securities, principally common and preferred stocks of large cap companies. Under normal market conditions, the Fund invests at least 80% of its net assets, plus borrowings for investment purposes, in securities of large cap companies.

The Fund defines large cap companies as those with market capitalizations that fall within the range of the Russell 1000® Value Index. As of December 31, 2018, the range of the Index was $365 million to $780.4 billion, but it is expected to change frequently.

The Subadviser employs a fundamental, bottom-up research driven approach to identify approximately 35 to 45 companies for investment by the Fund. The Subadviser focuses on those companies that it believes are higher quality businesses that are undervalued by the market relative to what the Subadviser believes to be their fair value.

The Subadviser seeks to identify higher quality companies by focusing on the following attributes:

  • Attractive business fundamentals
  • Strong financials
  • Experienced, motivated company management
  • High and/or consistently improving market position, return on invested capital and operating margins

The Subadviser then assesses the attractiveness of the valuations of those higher quality companies by analyzing a variety of valuation metrics, such as cash flow return on enterprise value, price-to-earnings, sales and free cash flow ratios, and break-up values, among others.

The Subadviser looks for potential catalysts for the company's business that could help unlock what the Subadviser believes is the company's true value, including:

  • Productive use of strong free cash flow
  • Restructuring and/or productivity gains
  • Change in management or control
  • Innovative, competitively superior products
  • Accretive acquisitions or divestitures

The Subadviser may sell a holding if the value potential is realized, if warning signals emerge of fundamental deterioration, or if the valuation is no longer compelling relative to other investment opportunities.

Risks

Since the Fund typically invests in a limited number of companies, an adverse event affecting a particular company may hurt the Fund's performance more than if it had invested in a larger number of companies. Since the Fund may hold foreign securities, it may be subject to greater risks than funds invested only in the U.S. These risks are more severe for securities of issuers in emerging market regions.

Stock markets are volatile and equity values can decline significantly in response to adverse issuer, political, regulatory, market and economic conditions.