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Look to HAPI and HAPY for Human Capital Lens of Sustainable Investing

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Social measures such as corporate culture tend to be under-represented in sustainable investing. While human capital is difficult to measure quantitatively, the Harbor Corporate Culture ETF (HAPI) and the Harbor Corporate Culture Leaders ETF (HAPY) are built around the “Human Capital Factor”, a distinctive investment factor developed by Irrational Capital.

Irrational Capital is an investment research and development firm that applies workplace behavioral science and data science to capture the powerful connection between human capital and value creation.

The Human Capital Factor is based on proprietary research conducted by Irrational Capital. It enables a strong, systematic assessment of a company's corporate culture and its link to potential future equity performance. Irrational Capital’s full dataset includes both public and proprietary sources, covering over 2,200 public firms, and 10 million employee responses totaling 500 million data points, according to Harbor Capital.

The Human Capital Factor first became publicly investable through HAPY, which launched in February, and serves as the foundation for HAPI, which launched in November. While HAPI and HAPY use the same methodology to identify and score companies based on the Human Capital Factor, each fund provides different, nuanced exposures.

HAPI's underlying index has a minimum market capitalization of $11 billion and a 5% individual stock limit (leading it to have smaller mega-cap exposure versus the S&P 500 Index). HAPY's underlying index has a minimum market capitalization of $1 billion, leading it to have some mid-capitalization exposure, according to Harbor Capital.

HAPI is generally sector neutral to the selection universe, with a maximum of 35% or a 10% band. On the other hand, HAPY’s underlying index is unconstrained and may have larger sector over/underweights, according to Harbor Capital.

HAPI's underlying index takes a more diversified, lower beta approach: HAPI will typically hold approximately 150 securities, while HAPY will typically hold between 70 and 100 securities.

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For more information, please access our website at www.harborcapital.com or contact us at 1-866-313-5549.


Important Information

All investments involve risk including the possible loss of principal. Please refer to the Fund’s prospectus for additional risks associated with each Fund: HAPI, HAPY

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 S&P 500 Index is an unmanaged index generally representative of the U.S. market for large capitalization equities. This unmanaged index does not reflect fees and expenses and is not available for direct investment.

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. The Fund is managed by Harbor Capital Advisors, Inc.

This article was prepared as Harbor Funds paid sponsorship with VettaFI.

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Investing involves risk and the potential loss of capital.

Investors should carefully consider the investment objectives, risks, charges and expenses of a fund before investing. To obtain a summary prospectus or prospectus for this and other information, click here or call 800-422-1050. Read it carefully before investing.

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