State of Wisconsin Investment Board, Madison, has invested in a second Harbor Capital Advisors corporate culture exchange-traded fund, bringing SWIB's investment across the two ETFs to more than $300 million, Harbor's president and chief investment officer said.
SWIB has invested more $100 million in the Harbor Corporate Culture Small Cap ETF, which launched in April, according to Kristof Gleich, Harbor's president and CIO.
"The Harbor Corporate Culture Small Cap ETF uses an innovative approach to identify smaller companies that have potential to outperform their peers and offer a risk-reward profile that fits favorably within SWIB's broader portfolio," SWIB said in a statement.
SWIB has $117 million invested in the small-cap fund, a SWIB spokeswoman confirmed in an email Thursday. As of Thursday, the ETF had net assets totaling $118.5 million, according to Harbor's website.
Its investment in the small-cap ETF comes after SWIB last year snapped up shares of another Harbor fund, the Harbor Corporate Culture ETF, launched in October 2022. SWIB's most recent 13F holdings report, filed with the Securities and Exchange Commission for the quarter ended March 31, reflected 9.87 million shares of the Harbor Corporate Culture ETF valued at $234 million. The ETF had net assets totaling $258 million as of Thursday.
The ETF, which goes by the ticker HAPI, has returned nearly 20% this year through Thursday, according to Morningstar, topping the 12.6% return of the large-blend Morningstar category average.
The two funds are among a trio of Harbor ETFs that offer exposure to the human capital factor, which was developed by Irrational Capital, a firm co-founded by behavioral economist Dan Ariely.
Harbor partnered with Irrational Capital "because we believe that they have a very structured and disciplined data-oriented process in which to measure businesses with superior human capital value," Mr. Gleich said in an interview. "And we began a partnership with them at the beginning of last year."
The Harbor Corporate Culture Small Cap ETF, which tracks a proprietary index methodology developed by the Canadian Imperial Bank of Commerce and Irrational Capital, "provides diversified access to U.S. small cap companies with strong corporate cultures to help investors capture the connection between human capital and performance," Harbor said in an April 13 news release announcing the ETF's launch.
Research indicates that intangible assets now make up 90% of the value of the S&P 500 index, up sharply from the 1970s, Mr. Gleich said.
"And one of the biggest contributors to intangible asset value is human capital," he said.
Intangible assets — ones that aren't physical in nature — accounted for 90% of the S&P 500 index's market value in 2020, up from 17% in 1975, according to Ocean Tomo's most recently released update of its Intangible Asset Market Value Study. Ocean Tomo, a part of global consulting firm J.S. Held, provides services focused on intellectual property and other intangible assets.
Harbor currently offers 13 ETFs, which had assets under management totaling $1 billion as of June 14, a Harbor spokesman said. Harbor, which also offers mutual funds and collective investment trusts, had $43 billion in total assets under management as of March 31.
SWIB had more than $143 billion in assets as of Dec. 31.
