Harbor Commodity All-Weather Strategy ETF Q2 2025 Commentary

The Harbor Commodity All-Weather Strategy ETF (HGER) returned 0.79% (NAV) in Q2 2025, outperforming the broad Bloomberg Commodity Index (-3.08%) but trailing its Quantix Commodity benchmark (1.07%). HGER's relative outperformance was driven by its overweight in Precious Metals, with Gold reaching record highs amid geopolitical uncertainty and strong central bank demand, alongside an underweight in declining Natural Gas and Oil. Despite broader market headwinds from U.S. policy uncertainty and tariffs, the Quantix Commodity Index rebalanced in Q2 by reducing Precious Metals and increasing Petroleum and Softs, while the outlook remains constructive on Gold due to fiscal deficits and continued central bank buying, with tight U.S. crude inventories supporting positive roll yields.

Analysis

In Q2 2025, the Harbor Commodity All-Weather Strategy ETF (HGER) delivered a positive return of 0.79% on a NAV basis, significantly outperforming the broader Bloomberg Commodity Index (BCOM), which declined by 3.08%, but slightly trailing its own benchmark, the Quantix Commodity Index (QCI), which returned 1.07%. The fund's relative outperformance was largely driven by its systematic, rules-based positioning, specifically a zero-weighting in Natural Gas as the subindex plummeted 23% and an underweight to the volatile Petroleum sector, which fell 5.9%. The primary positive contributor to absolute performance was its allocation to Precious Metals, which added 1.0% as Gold reached record highs fueled by persistent central bank buying, geopolitical uncertainty, and a weakening U.S. dollar, which hit a three-year low. Despite Gold's strong performance, the QCI benchmark executed a quarterly rebalance that reduced the Precious Metals weighting by 8.8% while increasing exposure to Petroleum (+5.8%) and other cyclical commodities, reflecting a systematic shift in its inflation indicators. The forward outlook remains constructive on the long-term drivers for Gold, such as fiscal deficits and de-dollarization, but acknowledges significant short-term risks from inflation and trade policy, while also monitoring tight U.S. crude inventories which are supporting positive roll yields in the energy sector.

Key Decisions for Investors

• Investors should recognize that HGER's rules-based strategy proved effective in a declining commodity market, as its outperformance against the BCOM was driven by key tactical underweights in Natural Gas and Petroleum, validating its potential as a vehicle for differentiated commodity exposure.
• Given the benchmark's systematic Q2 rebalancing reduced Gold exposure by 8.8% just as it peaked, investors must be comfortable with the fund's non-discretionary methodology which may tactically shift away from recent winners based on its inflation and scarcity signals.
• Monitor key forward-looking drivers mentioned in the report, particularly the U.S. Dollar Index (DXY) as a potential tailwind, OPEC+ production announcements given the fund's increased petroleum allocation, and central bank activity which underpins the long-term precious metals thesis.