Harbor Capital adds US small-cap ‘Corporate Culture’ ETF

Apr 19th, 2023 | By | Category: Equities

Harbor Capital Advisors has launched a US small-cap equity ETF that seeks to harvest returns from the underexplored human capital factor.

Harbor Capital launches small-cap corporate culture etf.

The fund invests in US small-cap companies with strong, supportive corporate cultures.

The Harbor Corporate Culture Small Cap ETF (HAPS US) has been listed on NYSE Arca with an expense ratio of 0.64%.

The ETF was developed in partnership with Irrational Capital, an investment research firm employing advanced data science to investigate the relationship between corporate culture and stock price returns.

According to Irrational Capital, companies that foster supportive corporate cultures exhibit high levels of employee engagement and motivation, a rich diversity of ideas, and greater innovation, thereby generating superior outcomes for investors.

This hypothesis has been backed up by independent analysis from JP Morgan’s Quantitative Research Team which found that a sector-neutral index based on the human capital factor generated “the highest returns and lowest volatility among all US investment styles with very low correlation to other factors.”


The fund is linked to the CIBC Human Capital Factor Small Cap Index which selects its constituents from the parent Solactive GBS United States 2000 Index, a broad universe comprising US-listed companies ranked 1,001 to 3,000 based on float-adjusted market capitalization.

The index aims to quantitatively and systematically capture risk premia associated with the human capital factor. It does this by harnessing the data analysis capabilities of Irrational Capital to aggregate millions of employee responses about deeply emotive characteristics such as trust, purpose, pride, psychological safety, point of view diversity, motivation, and transparency, among others.

The methodology selects the companies with the highest human capital scores, targeting a portfolio of approximately 200 stocks. Constituents are weighted by float-adjusted market capitalization subject to a single security cap, while the weight of each GICS sector is set to equal its weight in the initial universe.

The fund is the third ‘Corporate Culture’ ETF from Harbor Capital following the earlier launches of the Harbor Corporate Culture Leaders ETF (HAPY US) and Harbor Corporate Culture ETF (HAPI US). The funds both target US large-cap stocks with strong corporate cultures; however, HAPY weights its constituents equally while HAPI does so by modified market capitalization.

Kristof Gleich, President and CIO of Harbor Capital Advisors, said: “We are thrilled to expand our partnership with Irrational Capital to grow our suite of human capital ETFs, the latest focusing on small caps which we believe are poised to continue to help investors meet their long-term investing goals.”

Tags: , , , , , ,

Leave a Comment