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The Harbor Human Capital Factor US Large Cap ETF (HAPI) operates with an investment strategy focused on replicating the performance of the CIBC Human Capital Index. This passively managed fund seeks to offer investors exposure to companies recognized for strong human capital practices. During the second quarter, the ETF delivered a net asset value (NAV) return of 11.91%. While this represents a solid gain, it marginally underperformed its benchmark, the CIBC Human Capital Index, which posted a return of 11.97% over the same period. The slight divergence in performance can be attributed to various factors, including specific allocation decisions within the portfolio.

A notable aspect of the ETF's second-quarter performance was the impact of its active positioning, particularly the underweighting of certain prominent companies. The absence of significant exposure to industry giants like UnitedHealth Group and Berkshire Hathaway (Class B) emerged as a key contributor to the ETF's performance relative to its benchmark. These strategic choices reflect the fund's adherence to its indexing methodology, which prioritizes companies demonstrating strong human capital attributes, rather than simply mimicking market capitalization weights.

Understanding the Harbor Human Capital Factor US Large Cap ETF's Strategy and Q2 Results

The Harbor Human Capital Factor US Large Cap ETF (HAPI) is meticulously designed to mirror the CIBC Human Capital Index, adopting an indexing investment methodology. Its core principle revolves around identifying and investing in large-cap U.S. companies that exhibit robust human capital characteristics. In the second quarter, the ETF recorded a net asset value (NAV) return of 11.91%. This performance, while commendable, slightly lagged the CIBC Human Capital Index, which achieved an 11.97% return. The marginal underperformance highlights the intricate dynamics of index-tracking funds and the subtle influences that can create deviations from a benchmark. The fund's approach emphasizes the qualitative aspects of human capital, such as employee engagement, diversity, and talent development, believing these factors contribute to long-term corporate success and shareholder value.

The slight difference in returns between the ETF and its benchmark during the second quarter can be attributed to specific portfolio construction decisions. Notably, the ETF's lack of significant exposure to companies like UnitedHealth Group and Berkshire Hathaway (Class B) played a role in its relative performance. These were considered top active contributors, meaning their absence or reduced weighting had a measurable effect. The fund's strategy does not aim to perfectly replicate the broader market but rather to align with its specialized human capital index. This often means making deliberate choices to include or exclude companies based on their human capital metrics, even if those companies are large components of more general market indexes. The objective remains to deliver returns consistent with the CIBC Human Capital Index, reflecting the belief that human capital excellence is a powerful driver of corporate value.

Key Investment Details and Portfolio Management Insights

The Harbor Human Capital Factor US Large Cap ETF (HAPI) is identified by its ticker HAPI and CUSIP 41151J877. It operates with a net expense ratio of 0.35%, which also stands as its gross expense ratio, indicating a transparent and competitive cost structure for investors. The fund currently manages a substantial total net asset base of $398,812,907, reflecting significant investor confidence and liquidity. The ETF is benchmarked against two key indices: the CIBC Human Capital Index, which is its primary target for tracking, and the broader S&P 500 Index, providing a context for its performance relative to the wider U.S. large-cap market. This dual benchmarking allows for a comprehensive evaluation of its specialized strategy against both its specific human capital focus and general market trends.

The strategic oversight of the Harbor Human Capital Factor US Large Cap ETF is managed by a dedicated team, including Portfolio Managers Steve Cook and Elizabeth. Their expertise is crucial in ensuring that the ETF's investment approach remains aligned with the CIBC Human Capital Index, which guides its selection of companies. The fund’s focus on human capital implies an investment philosophy that values companies with strong employee relations, robust talent management, and diverse workforces, believing these attributes are indicators of sustainable growth and resilience. The portfolio managers are tasked with implementing this indexing strategy, which involves periodic adjustments to reflect changes in the underlying human capital index. This disciplined approach ensures that the ETF consistently adheres to its mandate of tracking companies distinguished by their human capital excellence, offering investors a unique exposure to this increasingly recognized factor in corporate success.