The Harbor Corporate Culture Small Cap ETF (HAPS) has garnered investor attention following its recent launch.
HAPS has accreted $109 million in assets under management since its listing on the NYSE Arca on April 13, 2023. We believe HAPS is an innovative offering, providing investors with exposure to small-cap companies with strong Human Capital Factor scores while constraining sectors to enhance overall diversification benefits.
“It is great to see the investor base in this relatively new corporate culture ETF build. Harbor has a differentiated suite of products that has clearly resonated quickly,” Todd Rosenbluth, head of research at VettaFi, said.
“It is a key milestone for an ETF to cross the $100 million mark. This should open the door for further adoption as some advisors cannot invest till it passes this mark,” Rosenbluth added.
HAPS was the third fund in Harbor Capital Advisors’ growing HAP- series, which also includes the Harbor Corporate Culture Leaders ETF (HAPY) and the Harbor Corporate Culture ETF (HAPI). HAPI also saw strong early adoption from investors, reaching $200 million in assets under management in less than a month after its launch in October 2022.
Under the Hood of Harbor’s Corporate Culture ETFs
HAPY, HAPI, and HAPS use the same methodology to score companies on human capital. The human capital factor is a distinctive investment factor measuring corporate culture and its connection to future equity performance. The underlying indexes of HAPS, HAPY, and HAPI leverage a propriety human capital scoring methodology from Irrational Capital, which they believe to be a direct systematic link between company culture and resulting company equity performance.1
The primary differences between HAPS, HAPY, and HAPI relate to index construction and resulting market capitalization. HAPS aims for a beta of 1 to the Russell 2000 Index, while HAPI aims for a beta of 1 to the Russell 1000 Index. Meanwhile, HAPS offers a sector-neutral approach, whereas HAPY is unconstrained.
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1 Although Irrational Capital developed the data-driven strategy built on the Human Capital Factor for the three funds, it is the only index provider for Harbor Corporate Culture Leaders ETF. Canadian Imperial Bank of Commerce (CIBC) is the index provider for the Harbor Corporate Culture Small Cap ETF and the Harbor Corporate Culture ETF.
Investors should carefully consider the investment objectives, risks, charges and expenses of a Harbor fund before investing. To obtain a summary prospectus or prospectus for this and other information, visit harborcapital.com or call 800-422-1050. Read it carefully before investing.
All investments involve risk including the possible loss of principal. Please refer to the Fund’s prospectus for additional risks associated with each Fund. For the most current standardized performance, holdings and current yields: HAPI, HAPY, HAPS
The Fund relies on the Index provider’s methodology in assessing whether a company may be considered a corporate culture leader. There is no guarantee that the construction methodology will accurately assess a company to include or exclude it from the index which could have an adverse effect on the Fund’s returns.
The Russell 1000® Index is an unmanaged index generally representative of the U.S. market for larger capitalization stocks. This unmanaged index does not reflect fees and expenses and is not available for direct investment. The Russell 1000® Index and Russell® are trademarks of Frank Russell Company.
The Russell 2000® Index measures the performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000® and includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000® Index and Russell® are trademarks of Frank Russell Company.
Beta is a measure of systematic risk, or the sensitivity of a fund to movements in the benchmark. A beta of 1 implies that the expected movement of a fund’s return would match that of the benchmark used to measure beta.
Irrational Capital LLC is a third-party index provider to the Harbor Corporate Culture Leaders ETF. The Fund is managed by Harbor Capital Advisors, Inc.
CIBC is a third-party index provider to the Harbor Corporate Culture ETF and Harbor Corporate Culture Small Cap ETF. The Funds aremanaged by Harbor Capital Advisors, Inc.
This article was prepared as Harbor Funds paid sponsorship with VettaFI.
Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.