HACAX: Top Harbor Funds for Retirement Diversification

August 1, 2016 — 3:25 AM EDT

Harbor Funds applies a manager-of-managers investing approach. The firm hires subadvisors who specialize in specific asset classes to run its portfolios. Harbor has employed managers from well-known companies, such as Jennison Associates, Pacific Investment Management Company (PIMCO) and LSV Asset Management. Many of Harbor’s mutual funds have seen excellent returns and received high ratings from MorningstarHarbor Funds is a subsidiary of a Netherlands-based company, Robeco Group N.V.

Harbor Capital Appreciation Fund (HACAX) 

The Harbor Capital Appreciation Fund is one of the company’s flagship investments. Managed by Spiros Segalas and Kathleen McCarragher from Jennison Associates, the fund invests in U.S. stocks with a market capitalization of at least $1 billion during purchase. The managers use a disciplined approach in their selection process, investing in companies with strong balance sheets, sales momentum and a unique market position. The fund has established an excellent track record and garnered a four-star rating from Morningstar using this approach. With a 0.65% expense ratio, the Appreciation Fund is relatively inexpensive and has an excellent track record.

Harbor Mid Cap Value Fund (HIMVX)

Investors seeking exposure to mid-cap companies and a diversified retirement portfolio should look to the Harbor Mid Cap Value Fund. It is managed by a team at LSV Asset Management and focuses on investing in companies that are fundamentally undervalued. The managers also look for companies with past negative sentiment and recent upward momentum to take advantage of temporary deflation in their stocks' prices. With a 0.88% expense ratio, and received a four-star rating from Morningstar.

Harbor International Fund (HIINX)

Harbor's International Fund is a great choice for retirement diversification. The fund is managed by a team from North Cross LLC and has produced returns far better than its benchmark, all for a low 1.13% expense ratio. The portfolio managers invest in larger international companies that have low price-to-earnings (P/E) multiples, above-average earnings and valuable business models. Investors looking for exposure to overseas companies should consider adding this fund to their retirement portfolios.

Harbor Bond Fund (HABDX)

Risk-averse investors who would like to reduce volatility in their portfolios by investing in the bond market should look at the Harbor Bond Fund. It is managed by PIMCO, a well-known fixed income manager, and received a four-star rating from Morningstar. The fund invests in high-quality corporate and government-issued bonds in the U.S. and abroad. Investors gain access to this asset class for a low 0.51% expense ratio and still receive a 2.7% yield. Investors looking for a disciplined fixed income strategy led by one of the best-known names in the industry should take a closer look at this fund.