Discretionary, IT Lifted HCAIX Year-to-Date 2015 through November

Attribution Analysis of US Mutual Funds through November 2015

(Continued from Prior Part)

Performance evaluation

The Harbor Capital Appreciation Fund – Investor Class (HCAIX) rose 1.0% in November 2015 from a month ago. In the three-month and six-month periods ended November 30, the fund rose 6.9% and 3.7%, respectively. In the one-year period, HCAIX returned 10.7%—one of only two funds to post double-digit returns. From the end of November until December 15, 2015, the fund was down 1.6%. We will analyze the YTD (year-to-date) period, which saw the fund rise by 12.3%.

So far, 2015 has been a good year for the fund. Although it placed fourth among 11 funds in November, for all other periods it held either the first or the second spot. For the YTD period, it emerged as the best performer. Let’s look at what contributed to the fund’s strong performance.

Portfolio composition and contribution to returns

Launched in November 2002, HCAIX is a comparatively newer fund in relation to its peers. The latest complete portfolio available for the fund is as of September 2015. We will use that portfolio as our base and consider valuation changes as of the end of November 2015 for our analysis. All portfolio percentages refer to their weights according to changes in valuation from September to November.

Although the consumer discretionary was the second-biggest held sector, it was by far the largest positive contributor to the fund’s returns YTD 2015 through November. The sector contributed over half of the fund’s total returns. Amazon.com (AMZN) was the primary reason why the sector was able to contribute to the fund in such a significant way.

Tiffany & Co. (TIF), Chipotle Mexican Grill, Inc. (CMG), and Dollar General Corporation (DG) contributed negatively to returns. However, the cumulative positive contribution far exceeded the total negative contribution.

The information technology sector was the second biggest contributor in the period. Facebook (FB) was the biggest individual positive contributor, followed by Class C and Class A shares of Alphabet Inc. (GOOG). Meanwhile, the sponsored ADR (American depositary receipt) of Alibaba Group Holding Limited (BABA) caused a substantial drag on the sector’s contribution.

While the sponsored ADR of BABA hurt the fund, another sponsored ADR helped it substantially: Novo Nordisk A/S (NVO) helped the healthcare sector up, as did Allergan plc (AGN).

Reasons for strong performance

The fund placed its bets on the two sectors that have done well this year while keeping exposure to losing sectors like energy and industrials to a minimum. More importantly, most stock picks in the top contributing sectors fired for the fund, helping it post a strong performance so far.

Let’s move on to the next fund in this series: the MFS Growth Fund – Class A (MFEGX).

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - The December 2015 Rate Hike and US Large Cap Equity Mutual Funds

• Part 2 - The American Funds AMCAP Fund Portfolio until November 2015

• Part 3 - Energy Exposure Hit the American Funds AMCAP Fund (AMCPX) in 2015