Steve Cook

Steve Cook is the head of ETFs at Harbor Capital Advisors, and he got his start in ETFs when NASDAQ launched QQQ. Bank of New York Mellon was selected as the trustee, and because early ETFs were registered as unit investment trusts, all the operational responsibility fell on the trustee. Cook got a firsthand look at the full ETF ecosystem: investment management, capital markets, trading, and basket creation. He's been in ETF-specific roles ever since, and now oversees product selection, capital markets, and operations for Harbor's growing ETF business.

On this episode, Steve talks with Brad about Harbor's 40-year history as a manager-of-managers, why moving ETFs to the NYSE floor made a measurable difference in execution quality, and HGER, their commodity ETF built for investors rather than corporate hedgers.

Harbor's Manager-of-Managers DNA

Harbor was formed 40 years ago as the pension management arm of Libby Glass and other Ohio manufacturing companies. The executive team believed their manager selection process was strong enough to offer publicly, so they spun it out into a professional mutual fund firm. For the first 35 years, Harbor was purely a mutual fund shop that sourced specialist managers in niche asset classes. They were the first to bring Pimco to market in a retail mutual fund structure and maintain a 50-plus year relationship with Jennison Associates, who manages their largest growth fund.

The firm launched CITs about four years ago for the retirement market, then entered ETFs in September 2021 targeting the wealth channel. The due diligence process for selecting sub-advisors focuses on two things: ensuring that whatever generated alpha historically is repeatable (not benchmark hugging with a lucky factor tilt that happened to work) and that managers have a genuine desire to continuously improve their process. Once selected, Harbor works with each manager for three to six months refining the strategy for the ETF structure, addressing trading approach, rebalance frequency, number of securities, and any exclusions needed for tradability in the daily create-redeem process.

Why the NYSE Floor Matters

Harbor was one of the first issuers to move ETFs to the NYSE floor, and Cook makes a detailed case for why. The core problem: advisors buying ETFs for multiple client accounts typically place market-on-open orders because their allocation systems work best with a single price across all accounts. But ETF opens are messy. All 150 or 500 underlying securities need to open individually, and computers widen ETF spreads dramatically during that price discovery process.

The result: advisors were seeing 30,000-share market-on-open orders execute 10 cents away from fair value. On a 30,000-share order, that's $3,000 in unnecessary cost. Across multiple orders per year, the drag becomes material. Moving to the floor inserts a human market maker (called a Designated Market Maker, or DMM) who can look at an incoming advisory order from Fidelity or Schwab, recognize it's not a professional trader trying to pick them off, do their own homework on the underlying securities, and open the ETF at two cents above fair value rather than letting the computer panic at ten cents.

Since moving to the floor, no Harbor ETF has had a market-on-open trade execute more than three cents from fair value. Cook calls it one of the best decisions they've made. They continue to move more products to the floor as volume warrants.

HGER: Commodities Built for Investors

HGER (Harbor All-Weather Commodity ETF) was born from a simple observation: every commodity product available to investors was based on indices (BCOM, GSCI, Bloomberg Commodity) originally created for manufacturers hedging their business, not for investors seeking inflation protection. The fund is managed by Quantix Commodities, whose leadership including Don Casturo ran the commodities trading desk at Goldman Sachs for over 20 years.

The Quantix Total Return Commodity Index can access up to 24 commodities including petroleum products, grains, softs, base metals, and gold. At the beginning of the year, the index committee examines each commodity's economic weight, liquidity, and roll yield. The key differentiator: based on scarcity and debasement indicators, the index dynamically increases or decreases gold exposure. Currently, gold sits at around 30% of the portfolio. This quarterly rebalancing mechanism means investors get a natural gold allocation during debasement periods without trying to time the market themselves.

Cook recommends a 6-8% portfolio allocation to commodities, noting that HGER recently crossed $100 million in AUM and has outperformed almost every other commodity index and product over its roughly 18-month track record. He also walks through ETF distribution breakpoints: $25 million opens some advisory platforms, $50 million opens independent platforms, and $100 million unlocks the large national advisory networks like Merrill and Morgan Stanley. HGER has now cleared that final threshold.

Key Takeaways

• Harbor has a 50+ year relationship with Jennison Associates and was the first to launch Pimco in a retail mutual fund wrapper, bringing four decades of manager selection expertise.
• Moving ETFs to the NYSE floor eliminated market-on-open executions beyond 3 cents from fair value, down from 10-cent slippage on 30,000-share orders that was costing advisors thousands per trade.
• HGER's index dynamically adjusts gold exposure (currently roughly 30%) based on debasement signals, rebalancing quarterly across up to 24 commodities.
• The Quantix team behind HGER includes former Goldman Sachs commodities trading desk leadership with 20+ years of experience in the asset class.
• ETF distribution follows breakpoints: $25M opens some platforms, $50M opens independents, $100M unlocks large national networks. HGER recently cleared $100M.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.