Despite People Pillar weakness and an Average Process Pillar, Harbor Human Capital Factor Uncons ETF gets enough right to retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in volatility exposure and an underweight in momentum exposure compared with category peers. High volatility exposure is attributed to companies with a higher standard deviation of returns. And low momentum exposure is rooted in holding stocks that are not currently on a winning streak and instead holding those that managers believe are undervalued. The team managing this passive strategy earns a Low People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Delta Air Lines

Occidental Petroleum

ConocoPhillips

Synchrony Financial

Pure Storage

Ameren

Transocean

Southern Company

Nasdaq

Lockheed Martin

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term. Harbor Human Capital Factor Uncons ETF earns an Average Process Pillar rating. The predominant contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also influence the rating. The pattern of low expenses at the firm suggests that it is focused on delivering strong results for investors. Lastly, the process is limited by the experience of the management team, which averages two years at this fund.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that correspond, before fees and expenses, and to the performance of the Human Capital Factor Unconstrained Index.  The fund employs an indexing investment approach designed to track the performance of the index. The fund invests at least 80% of its total assets in securities that are included in the index. The index is designed to deliver exposure to equity securities of U.S. companies that are “corporate culture leaders” based on scores produced by Irrational Capital. 

 The portfolio is overweight in financial services and technology relative to the category average by 10.2 and 8.0 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and consumer cyclical, underweight the average by 14.1 and 7.2 percentage points of assets, respectively. The portfolio is composed of 76 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 14.3% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 26.1%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 81% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Average

Process

Harbor’s team receives a Low People Pillar rating. The main factor behind the rating is the parent firm's five-year success ratio of 44%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. Management team experience, which averages two years at this fund, also weakens the team. The parent firm's five-year retention rate of 52% detracts from the rating further.

People

A history of thoughtful manager selection and continued investment in its research team underpin Harbor Capital Advisors' Above Average Parent rating.

Harbor is an independent subsidiary of Orix Corporation Europe N.V., itself a subsidiary of Japanese financial-services firm Orix, which bought Harbor's previous parent Robeco in 2013. Today Robeco, Harbor, and other asset managers operate autonomously under Orix, which takes a hands-off approach toward its subsidiaries.

Harbor has long been known for hiring best-in-class subadvisors to manage its roughly $64 billion held almost exclusively in actively managed mutual funds. Yet the firm has expanded its vehicle lineup in recent years: from February 2020 through March 2022, the firm introduced a collective investment trust version of an existing open-end strategy as well as six transparent, active exchange-traded funds. The firm has also shaken up its subadvisor lineup, removing Pimco from Harbor Core Plus HABDX in February 2022 and hiring smaller and less established asset managers like BlueCove and Quantix Commodities to manage its newer ETF offerings. These moves break new ground for Harbor, but the firm has invested in new data and analytics tools to help its capable manager research team oversee the expanding subadvisor roster and has retained long-standing subadvisor relationships where they continue to add value.

Above Average

Parent

Harbor Corporate Culture Leaders ETF

HAPY tracks an equal-weighted index of US-listed large-cap companies scoring highest in terms of a quantitative measure that ties corporate culture to financial performance.

Harbor ETF Trust - Harbor Corporate Culture ETF

Harbor Corporate Culture Small Cap ETF

According to Harbor Capital Advisors, human capital is difficult to measure yet essential to a company's success and profitability. Harbor has a suite of human capital ETFs that are based on proprietary data, offering investors exposure to the nontraditional human capital factor for the first time.

Under the Hood of Harbor's Human Capital ETFs

iShares California Muni Bond ETF

iBet Sports Betting & Gaming ETF

Invesco Raymond James SB-1 Equity ETF

With only four trading days during the week, ETF launches were few and far between. Only four new funds launched this week.

This Week in ETFs: Shortened Week Yields 4 Launches

 BlackRock Future Innovators ETF

iShares MSCI Germany Small Cap ETF

iShares Currency Hedged MSCI Canada ETF

iShares Currency Hedged MSCI United Kingdom ETF

AdvisorShares Peritus High Yield ETF

Noble Absolute Return ETF

Advisorshares Poseidon Dynamic Cannabis ETF

Harbor Small Cap Explorer ETF

SPDR S&P 500 ETF Trust

ETFMG Sit Ultra Short ETF

This week saw a total of 17 ETF launches, a major rebound from last week when only six funds debuted and a reversal of the summer trend of fewer launches. ETF closures continued their march forward, with several completing during the week and another handful announced.

This Week in ETFs: Summer Doldrums Ending?

Harbor has launched a small-cap ETF, expanding its human capital investing suite. The Harbor Corporate Culture Small Cap ETF (HAPS), listed on the NYSE Arca on April 13, offers exposure to small-cap companies with strong Human Capital Factor scores while constraining sectors to enhance overall diversification benefits.

Harbor Grows Human Capital Investing Suite With Small-Cap ETF HAPS

Intangible assets have become increasingly important in the modern economy. We believe valuations of businesses are now skewed to an increasing extent toward intangible versus tangible assets.

Access the Human Capital Factor With HAPY and HAPI

Harbor Dividend Growth Leaders ETF

Harbor Health Care ETF

Harbor Energy Transition Strategy ETF

Thematic investments are seeing a resurgence in investor interest after developing a – perhaps undeserved and unwarranted – negative reputation in recent years. The economic regime has shifted, and passive index funds aren't offering the returns they did in the post-global financial crisis decade.

Harbor CIO Kristof Gleich: Thematics Help Advisors Connect With Clients

Harbor Disruptive Innovation ETF

Harbor Long-Term Growers ETF

Despite the cloudy economic outlook, markets started the new year on a high note.

3 Harbor ETFs Returned Over 10% in January

Democracy International Fund

Freedom 100 Emerging Markets ETF

JPMorgan Equity Premium Income ETF

KPOP and Korean Entertainment ETF

Schwab US Dividend Equity ETF

Xtrackers S&P ESG Dividend Aristocrats ETF

Fairlead Tactical Sector Fund

VettaFi Financial Futurist Dave Nadig appeared on Yahoo Finance to discuss the big year for ETFs. “We had over 400 launches this year,” Nadig said, which he thinks could be a record.

Dave Nadig Drills Into the Big Year For ETFs on Yahoo

Harbor Scientific Alpha Income ETF

Harbor Scientific Alpha High-Yield ETF

Interest rates are up and glamour stocks are down, big; the era of cheap money has come to an end. The regime change will mean that markets remain more complex and challenged than they have in the past decade, and security selection will continue to play a much bigger role in generating returns.

4 Harbor ETFs to Invest in Through This Regime Change

Clockwise Capital Innovation ETF

Global X Dow 30 Covered Call ETF

Dimensional US High Profitability ETF

SPDR S&P SmallCap 600 ESG ETF

SPDR R Blackstone High Income ETF

Amplify Inflation Fighter ETF

IQ US Mid Cap R&D Leaders ETF

Engine NO 1 Transform Climate ETF

The U.S. exchange-traded fund (ETF) industry had quite a year in 2021 – due in part to the 445 new ETFs that launched, 44% more than did in 2020. U.S. ETFs ended the year with record assets of $7.21 trillion, 31.9% higher 2020.

9 New ETFs for Investors to Unwrap

Plus, a number of ETF changes took place during the week.

ETF Odds & Ends: Harbor Adds Corporate Culture Fund

Harbor Capital has launched a purpose-driven ETF for investors looking to capitalize on the financial outcomes of companies that foster workplaces where employees are valued and motivated, driving equity value.  The Harbor Corporate Culture Leaders ETF (HAPY), listed on the NYSE on February 24 with an expense ratio of 50 basis points, will use data [.

Harbor Launches Corporate Culture Leaders ETF, ‘HAPY'

Harbor All Weather Inflation Focus ETF

CHICAGO--(BUSINESS WIRE)--Harbor Capital Advisors, Inc. (“Harbor Capital”) today launched the Harbor Corporate Culture Leaders ETF (HAPY), which aims to capture the alpha generated by companies with the strongest employee/employer relationships.

News for Harbor Corporate Culture Leaders ETF ETF (HAPY)