3 ways Harvest ETFs capture Internet of Things growth

July 3, 2020

The Internet of Things has become the common phrase used to describe the interconnection of sensors and software with phones, tablets and computers. The coronavirus pandemic is helping accelerate the evolution of these technologies and speeding up the introduction of new products and services.

How IoT works

The opportunities in this area involve almost anything to which you can attach a sensor.  Medic alert bracelets use GPS tracking and motion sensors to detect falls. An Apple Watch tracks heart rate and average speed during a bike ride. A Google Nest thermostat sends a text that the furnace is coming on. The bathroom scale offers an average weight based on how often you stand on it. A collar tracks your dog’s whereabouts.

The Internet connects the devices and then sends the information to software that takes the information and analyses it.  In hospital settings, the Internet of Things is allowing doctors, nurses and other staff to consult with patients by phone or video, offer or to monitor their vital signs remotely. In industrial settings, it is speeding up manufacturing and making it more efficient and helping advise on maintenance and repair issues. It is making cars smarter.

As investors look at these advances, they realize they are unfolding unevenly. Unlocking the potential takes time and today’s leaders are not necessarily tomorrow’s winners. One way to reduce risk and capture the opportunities is to invest in global leaders. They have mature, proven businesses, the resources for research and development and the desire to maintain their dominance.

Harvest ETFs capture IoT growth in 3 Ways

Several Harvest Portfolio Group ETFs are well positioned to help investors do this.


1. The Harvest Tech Achievers Growth & Income ETF holds 20 large global technology names. The ETF (TSX:HTA, HTA.U, HTA.B) is actively managed with an average market capitalization of $454 billion CAD as at May 31, 2020. More than half of the companies are in the software (28%) and semiconductor (28%) industries.  The top holdings include internet security firm Fortinet Inc., networking hardware and software firm Cisco Inc. and chip manufacturer Intel Inc.


2. The Harvest Healthcare Leaders Income ETF (TSX:HHL, HHL.U, HHL.B) holds 20 global companies in the healthcare sector with an average market capitalization of $204 billion CAD as at May 31, 2020.  The biggest weightings are pharmaceuticals (47%) and healthcare equipment and supplies (19%). The top holdings are drug maker AbbVie Ltd. and medical device makers Boston Scientific Corp., and  Medtronic Inc.


3. There is also crossover with the Harvest Brand Leaders Plus Income ETF  (TSX: HBF, HBF.U, HBF.B) which holds  20 global brand leaders who are the dividend elite. Companies in the information technology, healthcare and industrial sectors make up 42% of its holdings as at May 31, 2020.

These ETFs are benefitting from the rapid developments in the Internet of Things, which are also known as Machine to Machine (M2M) technologies.

Here are some applications by companies in the Harvest ETFs:

Homes:

Companies manufacturing the chips, sensors and internet backbone include Broadcom Inc., Cisco Systems Inc,. and Intel Corp. Accenture plc, another holding, helps manufacturers and retailers analyse and interpret the data.

Areas include sensor-equipped fridges, stoves and toasters. Lights and heating activated by voice command connected by Wifi to phones, tablets and via Bluetooth in cars. The cross connections of tablets and smart phones to TVs to watch Netflix or Apple TV and play music on Spotify or Amazon Prime music.

Healthcare:

The innovations include robot-assisted surgical tools, wearable devices and implants, ehealth and telehealth. Implants such as heart monitors and pacemakers are connecting patients and mobile devices to their doctors. Medtronic plc has introduced a tablet to help doctors link subcutaneous devices that monitor vital signs to a wireless internet connection. The coronavirus has accelerated efforts by United Health Group Inc., a managed health care company to introduce online and mobile tools. These include virtual visits with a doctor or nurse, plus wellness initiatives and access to medical records and prescriptions.

Manufacturing:

Smart manufacturing cuts costs and improves efficiency, safety and reliability. Intel Corp. uses connected sensors on assembly lines to track and warn of equipment wear. Texas Instruments Inc., designs and makes semiconductors and integrated circuits, used in home appliances, car object-detection sensors and factories.

Automotive & transport:

Today’s automobiles are filled with sensors and computing equipment. Cars know where they are, where other vehicles are and can warn of mechanical or other problems. They can stream music and can call for roadside assistance. Waymo, owned by Alphabet Inc., Google’s parent, expects to have driverless cars on the road next year.

Security & surveillance: 

Consumers are wary of how safe and secure their data is. Fortinet Inc. develops and markets firewalls, anti-virus, intrusion prevention and endpoint internet security  It has 450,000 clients including the Canadian federal government which uses Fortinet to protect its IT infrastructure.

The Harvest Advantage

Harvest ETFs are RRSP, RRIF, RESP and TFSA eligible and distributions are available as cash or as DRIPs for certain Harvest ETFs. The companies in its ETFs are selected because they are global leaders with strong businesses and a history of profitability. They are well positioned to benefit from developing trends and potentially increase their dividends over time.

Harvest uses a covered call strategy that allows the ETFs to enhance an additional stream of income beyond dividends in a tax efficient distribution.

 

 

For more on Harvest ETFs., managed by Harvest Portfolios Group Inc., click here.

 

 

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