In the initial quarter of 2026, the Harbor Health Care ETF (MEDI) demonstrated a notable resilience, delivering a return of -6.65% (NAV). This performance surpassed that of its comparative benchmark, the Russell 3000® Growth Health Care Index, which recorded a return of -8.92% over the same period. The key factor contributing to this superior outcome was astute stock picking, particularly within the biopharmaceutical domain, which emerged as the leading sector within the Index. This strategic advantage, coupled with a supportive factor tailwind, positioned the ETF favorably in a challenging market environment.

The management commentary from Westfield Capital Management Company, L.P., underscores a positive outlook on the healthcare sector. As of March 31, 2026, their highest conviction remains firmly placed in commercial-stage biopharmaceutical companies. This strategic focus indicates an ongoing belief in the growth potential and innovation within this specific segment of the healthcare industry. Their proactive approach to investment is evident in their sustained confidence in these enterprises.

During the review period, the market dynamics for healthcare were complex, yet MEDI managed to navigate these conditions effectively. The emphasis on carefully selected biopharmaceutical stocks allowed the ETF to capitalize on the strengths of the best-performing vertical. This targeted investment strategy not only mitigated some of the broader market downturns but also helped the fund to achieve a competitive edge. The disciplined allocation of capital to promising areas within biopharma played a crucial role in its relative success.

The outperformance was not solely attributed to individual stock choices. A modest, yet impactful, factor tailwind also played a supportive role. This suggests that broader market trends and underlying economic conditions, even when challenging, aligned in a way that benefited MEDI's investment philosophy. Such an alignment can amplify the positive effects of strong stock selection, leading to enhanced returns compared to the general market.

Looking ahead, the Harbor Health Care ETF's strategy is poised to continue focusing on high-potential segments within healthcare. The sustained confidence in commercial-stage biopharma companies indicates a long-term vision rooted in innovation and market demand. This forward-looking perspective, combined with a proven track record of strategic asset allocation, positions MEDI to pursue continued positive results in the evolving healthcare landscape.