Harbor Capital Advisors has launched the Harbor Corporate Culture Leaders ETF (HAPY), which aims to capture the alpha generated by companies with the strongest employee/employer relationships.
The fund’s objective is to seek to provide investment results that correspond, before fees and expenses, to the performance of the Human Capital Factor Unconstrained Index, which was created to quantitatively and systematically capture the lift that strong corporate culture has on a company’s future stock price.
The index is designed to deliver exposure to equity securities of large cap US companies that demonstrate high employee engagement and motivation, based on human capital scores produced by Irrational Capital LLC. Co-founded by behavioural scientist Dan Ariely, Irrational Capital is an investment research and development firm that applies workplace behavioural science, financial acumen, and data science to capture the powerful connection between human capital and financial outcomes.
The firm writes that Irrational Capital’s Human Capital Factor goes beyond simple check-the-box social investing by deeply understanding company culture and intrinsic employee motivation, then transforming these insights into investment strategies.
“We’re thrilled to partner with Dan Ariely and the broader team at Irrational Capital. There has never been a more important time to focus on the well-being of the relationship between companies and their most important asset, their people. With Dan and the Irrational team’s unique insights into the space we’re confident we have a compelling solution for clients interested in this new field of investing. We believe Human Capital remains misrepresented by outdated accounting rules that could lead to market inefficiencies over the longer term. Thoughtful active approaches can exploit those inefficiencies,” says Kristof Gleich, President & CIO, Harbor Capital.
“We believe we have discovered a way to quantitatively capture the powerful connection between human capital and financial outcomes in an investable way,” said Ariely. “By uncovering the capital in human capital, we help create investment options that seek to prove that doing the right thing pays. We are delighted to partner with Harbor Capital in offering investors access to the power of human capital, which so clearly demonstrates that doing the right thing pays.”