Harbor Capital rolls out second ‘Corporate Culture’ US equity ETF

Oct 17th, 2022 | By | Category: Equities

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

Kristof Gleich, President and CIO of Harbor Capital Advisors

Kristof Gleich, President and CIO of Harbor Capital Advisors.

The Harbor Corporate Culture ETF (HAPI US) has been listed on NYSE Arca with an expense ratio of 0.36%.

Similar to the existing Harbor Corporate Culture Leaders ETF (HAPY US), the new 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.”


HAPI is linked to the CIBC Human Capital Index which selects its constituents from a universe that is a proxy for the S&P 500.

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 a subset of companies with the highest human capital scores. Constituents are weighted by float-adjusted market capitalization subject to a single security cap of 5%, while the weight of each GICS sector is set to equal its weight in the initial universe.

The index is rebalanced on an annual basis.

Harbor Capital’s original Corporate Culture ETF, HAPY, is similar but begins with an initial universe consisting of large and mid-cap stocks listed in the US. The fund targets between 70 to 100 firms with the highest human capital scores and weights them equally in the portfolio. The ETF has an expense ratio of 0.50%.

Kristof Gleich, President and CIO of Harbor Capital Advisors, said: “We continue to see strong investor demand in the field of human capital investing and are thrilled to partner with world-renowned behavioral scientist Dan Ariely and his colleagues at Irrational Capital on our second Corporate Culture ETF. HAPI provides investors with more options to access the Human Capital Factor which we believe is the most comprehensive measure of employee motivation and a differentiated investment factor linked to future equity performance.”

Dan Ariely, co-Founder of Irrational Capital, added: “We’re delighted to expand our partnership with Harbor Capital to deliver further evidence that doing the right thing pays and is strongly linked to future investment performance. Our work has clearly proven that corporate culture and employee motivation are deeply connected with financial performance. Harbor Capital is on the leading edge of developing products that provide access to this new factor.”

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