J.P. Morgan's Sixth Human Capital Factor Report Highlights Persistent Alpha and Multi-Factor Performance

We are delighted to share that J.P. Morgan published their sixth research note on the Human Capital Factor® (HCF) – the data-driven measure of how a motivated, effective, and engaged workforce can meaningfully boost investment returns.

Highlights include:

• Portfolios built around HCF-strong companies have outperformed the market by about 4 percent a year on average, with lower drawdowns and steadier long-term gains.

  
  

• High-scoring firms show faster earnings growth, better profitability, and stronger balance sheets, while low-scoring peers lag over time.

They also report:

"The [HCF] data continues to reinforce the value of integrating human capital metrics into portfolio construction. Companies with strong HCF scores tend to demonstrate greater resilience and sustained outperformance over time, while those with weaker scores are more vulnerable to adverse market conditions."

And -

“As investors increasingly seek differentiated sources of alpha, the Human Capital Factor remains a robust and forward-looking signal for equity selection."

New for 2025: J.P. Morgan’s research includes HCF data for European listed companies. While early results are more variable, adding the HCF to J.P. Morgan’s established Q-Score multi-factor model significantly improves performance consistency and risk-adjusted returns.

The combined HCF + Q-Score (“HCFQ”) approach produces smoother results and smaller losses during downturns, showing the model’s potential for use across regions.

To access the full research report please click here.