By analyzing current assets and comparing that figure to future needs, the program created an asset allocation model which was used for directing assets into various Harbor fund products. This relatively straightforward strategy, combined with an uncanny ability to select successful subadvisors for the funds, resulted in substantial new assets for Harbor. Six of the firm's eight funds currently carry Morningstar ratings of four stars or better, and one of the remaining two funds is too new to be rated. Many of these managers are the same institutional advisors that have managed the company's defined benefit plans. This means that while the institutional advisors may not be well known to the plan participants, they're very familiar to the individuals who are responsible for establishing and administering the programs.
Costs are generally more closely scrutinized within the treasury, as well.
This, too, has played a big role in the success of the institutional advisors, whose products are on average 25 basis points cheaper than those offered by their retail market competitors. A third and increasingly important factor is style consistency. As institutional advisors, these firms have historically been more sensitive to running money in a manner consistent with their stated investment style. Cash flows are steady and predictable, while the demographic picture argues in favor of continued growth for at least another decade. While nearly every fund sponsor of any consequence has indicated interest in the market, our data indicates that only a relative few have succeeded in capturing truly significant assets.