Today, Harbor Capital rolled out an ETF that takes a new angle on the theme of disruptive innovation. The Harbor Disruptive Innovation ETF (INNO) is a direct competitor to the $19 billion ARK Innovation ETF (ARKK), but it has a somewhat different approach to the space.
INNO comes with an expense ratio of 0.75%, the same as what ARKK charges, and it lists on the NYSE Arca.
In a rather unusual move, Harbor Capital, the fund’s advisor, relies on five subadvisors to present it with actively managed model portfolios that reflect the subadvisors’ respective strategies and views on disruptive innovation.
The fund advisor will then implement the recommended portfolios as it sees fit. The overall fund will invest primarily in U.S. securities, but can hold up to 25% of its portfolio in international stocks, the prospectus says.
While there are a handful of ETFs that use multiple managers, they are quite rare in the space.
The five subadvisors include BIO Partners, which specializes in health care and genetic technologies; NZS Capital, which focuses on companies benefiting from the transition from an analog to a digital economy; Sands Capital Management, which looks across sectors to identify companies that are improving upon the status quo; Tekne Capital Management, which focuses mainly on technology and telecommunications; and Westfield, which targets companies mainly in technology and health care that are providing disruptive products or services to a broad audience, according to the fund document.
ARK Invest pulled in more than $20 billion during 2020, but its funds have stumbled this year, with all but one of its eight funds having seen outflows since mid-February. With five separate teams providing Harbor with their best ideas, INNO could offer investors an attractive alternative to ARKK.
Contact Heather Bell at [email protected]