Harbor International Compounders ETF — Q3 2025 Review & Outlook

In Q3 2025 the Harbor International Compounders ETF navigated a mixed global market, focusing on high-quality, revenue-compounding companies outside the U.S. The fund’s strategy — concentrating on durable business models, strong cash flow generation and reinvestment potential — helped it capture upside in select regions while limiting downside during bouts of risk-off sentiment. Key contributors during the quarter included exporters and consumer-oriented franchises that benefited from resilient end-demand and favorable currency dynamics.

Sector dynamics were uneven: consumer staples and selective technology names provided stability, while cyclical industrials faced headwinds tied to slower manufacturing indicators in parts of Europe and emerging markets. The fund’s country exposures were actively managed to reflect where durable growth and attractive valuations intersected. Managers increased weightings in companies demonstrating consistent margin expansion and reduced exposure where macro uncertainty or valuation risks outweighed growth prospects.

Portfolio positioning emphasized balance between growth and quality. The ETF maintained a bias toward mid and large-cap compounders with predictable cash conversion and shareholder-friendly capital allocation. Company selection prioritized management teams with credible long-term plans and the ability to compound returns through reinvestment or disciplined buybacks. Currency management and position sizing were used to control volatility without sacrificing exposure to secular growth themes.

Risk management remained central: diversification across industries and geographies, selective use of position caps and ongoing fundamental research helped navigate volatility. Looking ahead, the fund’s outlook is cautiously constructive. The managers expect pockets of opportunity among firms with pricing power, strong balance sheets and exposure to secular demand drivers, while remaining vigilant about macro shifts, inflation trends and central bank policy moves.

Investors should view the ETF as a way to access international companies that combine durable growth with capital-efficient operations, understanding that regional and currency swings can affect near-term returns. For long-term investors focused on quality compounders outside the U.S., the fund’s disciplined, research-driven approach aims to capture compounded equity returns while managing downside risks.