Monthly ETF Commentary

August 2025

Market momentum and market leaders

The positive momentum for markets continued through the month of July with both the United States and Canadian markets hitting all-time highs for the second month in a row. While technology and growth-oriented equities have led the charge, we are seeing broader market participation.

Since the “Liberation Day” tariffs were announced in April, technology has been the best performing sector. Year to date, Industrials have been the best performing sector. Meanwhile, the Utilities sector, a traditionally defensive space, has been the second-best performer. This counters the wider commentary suggesting it is only a select few stocks or sectors that are participating in the market rally. It also highlights some of the rotations that have occurred in the broader market over the past several months.

On a closer look, mega-cap and momentum stocks continue to lead, while defensive areas outside of utilities have lagged. Despite these occurrences, our team maintains that having diverse exposure in this environment is essential.

Earnings and valuations

On the earnings side, the broader markets have shown strong profit growth in the face of macro challenges and a negative news-cycle. Technology and financials have been especially formidable. Notwithstanding, we continue to watch sectors that have experienced profit margin compression.

Valuation multiples across the market are elevated, but strong earnings growth could help to normalize them. Interestingly, when we examined the market on an equal-weight basis, it appears not as expensive as the headlines suggest. This indicates that there continue to be exciting pockets of opportunity under the surface.

Our portfolio team tracks the CBOE Volatility Index (VIX). They often see a seasonal increase in September. Valuations alone do not cause market corrections, and the same is true for market bottoms. This is a lesson to keep in mind as we approach the late summer period.

Take the healthcare sector. Healthcare is trading at one of its widest valuation spreads relative to the broader market in decades. This does not mean that the sector being inexpensive is in and of itself a short-term catalyst. There are several catalysts for a rotation which we have examined in several recent Insight pieces specific to healthcare. As we move through the fall, we will continue to monitor for more catalysts driving the sector.

The macro economy

On the economic front there appeared to be mixed signals as shown in the data:

• Manufacturing and industrial production have been resilient.
• Several measures of inflation appear to be contained for the present.
• Recent employment data raised some concern, with the U.S. experiencing its weakest three-month nonfarm payrolls since the COVID-19 pandemic.
• Canada’s economy lost over 40,000 jobs in July, where the market expected a 10,000-job gain.

The U.S. economy seems relatively strong. However, a potential risk that could emerge is the politicization of data collection and reporting, which could lead to distrust in future reporting. The U.S. administration fired the commissioner of the Bureau of Labor Statistics, suggesting that data was “manipulated” in a negative direction.

In Canada, there is a higher likelihood for interest rate cuts going forward.

Back to the basics | Featured ETFs

“Back to school” season is looming. In that spirit, it is worth going back to basics from an investing perspective. That means diversifying geographically, by sector, and by style.

At Harvest, the Harvest Diversified High Income Shares ETF (HHIS:TSX) and the Harvest Tech Achievers Growth & Income ETF (HTA:TSX) are focused on the higher growth areas of the market. Those factors continue to perform well. On the defensive side, the Harvest Equal Weight Global Utilities Income ETF (HUTL:TSX) represents an outlier in the utilities space.

Complementing growth with factors like low volatility and income through one ticket solutions like the Harvest Low Volatility Canadian Equity Income ETF (HVOI:TSX) and the Harvest Diversified Monthly Income ETF (HDIF:TSX) is well timed. We reiterate that the “buy the dips” mentality that has persisted since April is likely to stay in place.

Harvest Healthcare Leaders Income ETF

Healthcare posted a negative return for the month of July, again standing amongst the worst performing sub-sectors in the broader market. The ETF continues to operate in an environment where:

• • Policy uncertainty remains the focus and is driving negative sentiment.
  • Managed care companies are faced with higher utilization and cost trends that many view as temporary | Also facing uncertainty due to policy.
  • Several companies have posted strong earnings, benefiting from shorter term appreciations. These include Thermo Fisher Scientific and Johnson & Johnson.

Despite the macro headwinds, valuations remain compressed. In many cases, valuations have shrunk to levels not seen since the pandemic era and even prior to that in the early 1990s.

HHL invests in 20 large-cap healthcare leaders and pays a monthly distribution of $0.06 per unit, yielding 10.40% as of July 31, 2025.

Outlook | Despite short-term volatility and policy-driven pressure on the sector in the short term, the long-term fundamentals remain solid, driven by: Aging populations, developing nations, and technological innovation | HHL provides steady monthly income and remains one of the top performing ETFs in the healthcare ETF group.

Harvest Brand Leaders Plus Income ETF

HBF rose in July, outpacing returns for equal weighted large cap U.S. indexes. The factors that boosted the ETF’s investments during July were:

• • Equities advanced on optimism over deregulation and artificial intelligence (AI) | The “One Big Beautiful Bill” boosted sentiment.
  • Oracle and Microsoft gained from AI enthusiasm. Accenture slipped on growth concerns, and UnitedHealth Group remained under pressure following reinstated fiscal year guidance that underwhelmed.
  • Easing of Tariff risks, though not fully resolved, have kept investors cautious through earnings season.

The ETF maintained its covered call strategy, as it continues its focus on balancing income generation with participation in equity upside. The portfolio was rebalanced in July. A position in Amazon.com Inc. was added while the position in Pepsi Co. was eliminated.

Outlook | Ongoing tariff uncertainty and macroeconomic concerns kept markets volatile | Equal weight and specific value, quality & yield-based financial metrics can help in current environment with ongoing rotations.

Harvest Tech Achievers Growth & Income ETF

HTA regained more ground in July, posting a positive return. This reflects the state of the overall technology sector, which has powered the broader markets. Of note we saw:

• • Technology stocks led markets higher in July, driven by sustained AI excitement and easing tariff worries.
  • AI-levered firms like Arista Networks Inc. rallied, Oracle rose on cloud growth, while Accenture continued to decline. Palo Alto Networks declined following the announcement of a $22 billion acquisition of CyberArk Software Ltd.
  • Broader uncertainty lingered as investors weigh earnings results and evaluate incoming policy announcements.

HTA uses covered calls to generate income while remaining positioned to capture growth potential in leading tech names. The ETF was rebalanced in July, but no changes were made to the portfolio constituents.

Outlook | AI-driven tech demand continues | Equal weight can help to avoid over concentration I HTA is positioned in large-cap tech leaders and writes call options to support steady income.

Harvest Equal Weight Global Utilities Income ETF

HUTL posted positive return in July, mirroring the overall Utilities and Telecom sector. Utilities lagged the broader markets initially but caught back up by month end. Two of the more important factors influencing Utilities in July included:

• • Topping out of yields, with 20-year yields hitting a ceiling of ~5% and dropping; and
  • The AI boom, which highlights growing electricity demand, offered a medium-term tailwind for the sector.

HUTL’s portfolio of 30 top utility, telecom, and pipeline companies offers a balance of defensive income generation while capturing potential upside. The portfolio is supported by a covered call overlay to boost monthly cash flows. The ETF will be reconstituted in August.

Outlook | HUTL is well-positioned in uncertain markets and for AI energy demand tailwinds I Can provide steady cash flow amidst broader macro uncertainty I HUTL remains a leading utility ETF in Canada.

Harvest Global REIT Leaders Income ETF

HGR was down for the month reflecting a selloff in REITs in the last couple of days in July. This mimicked the overall performance of the REITs sub-sector, which lagged the broader market. There were gains in growth-tilted International, including Merlin Properties which is growing Data Centers in Spain, US data center, and industrial REITs. However, those gains were offset by softer performance in most other segments.

HGR remains broadly diversified across global REIT subsectors, offering exposure to growth-oriented assets with value plays like office and healthcare REITs. This approach helps manage macro uncertainty while targeting consistent income from global real estate leaders.

Outlook | Global REITs face headwinds from rate uncertainty and trade tensions | HGR’s diversified tenant and lease exposure offers resilience I HGR is positioned to benefit from exposure to growth themes like data warehouses & online shopping trends with industrial warehouses globally.

Harvest Energy Leaders Plus Income ETF

HPF and broader Energy stocks were positive for the month. The two notable catalysts impacting a short-lived spike in crude oil, and the outcome of Energy stocks were:

• • Trade agreement headlines, which suggested a better view on the global economy; and
  • The US tightened a deadline on a Russian/Ukraine ceasefire and threats of sanctions on Russia.

HPF continues to balance exposure to large-cap energy names with a covered call strategy to generate income. The ETF was rebalanced in July with no changes to the names.

Outlook | Oil markets face macro and supply-side instability | HPF retains quality energy names aligned with long-term capital discipline and yield strength.

Harvest US Bank Leaders Income ETF

HUBL recorded positive return for July driven by:

• • The rallying of U.S. bank stocks in July on positive earnings results and expectations for further deregulation.
  • Citigroup led gains, while Huntington Bancshares Inc. and M&T Bank Corp. lagged.

HUBL maintains a covered call strategy for income. It remains positioned to benefit from renewed investor confidence in the banking sector as risks around tariffs and policy uncertainty eased.

Outlook | The US Federal Reserve Bank’s rate expectations and loan growth outlooks will shape returns | Covered calls can help manage risk in a volatile macro banking environment.

Harvest Canadian Equity Income Leaders ETF

HLIF was up strong again on new record highs in the overall Canadian markets:

• • Canadian equities reached new highs in July as tariff tensions cooled despite tariffs on Canada eventually being set at 35% and the Digital Services Tax dispute with the U.S. deescalated.
  • Utilities, telecoms, energy, and Magna outperformed, while Insurance and Choice Properties REIT weighed on performance.

The ETF focuses on Canada’s top dividend payers, refreshed quarterly. The portfolio’s covered call overlay can help to support stable monthly income in a mixed economic environment.

Outlook | Equal weight and dominant oligopolistic-like companies in the Canadian market | The portfolio remains focused on size & yield in domestic market I HLIF is positioned defensively & favours stable cash flow names.

Harvest Travel & Leisure Income ETF

TRVI posted a positive return for the month despite a late sell-off that erased some of the gains from its initial rally. Some of the key factors impacting the sector were:

• • Mixture of quarterly earnings results
  • Resilient consumer spending and a “soft landing” outlook
  • Long-term travel demand remains supported by demographic trends despite potential economic headwinds

TRVI offers diversified exposure to top travel stocks and overlays a covered call strategy to generate income. It hedges its U.S. dollar exposure and seeks to enhance yield while reducing individual stock risk.

Outlook | While some short-term pressure from consumer is cautionary, the sector is well positioned to benefit from secular trends like aging demographics and resilient travel demand. I The sector is poised to benefit from renewed interest in the consumer discretionary.

Harvest Industrial Leaders Income ETF

HIND posted a positive return in July, as industrial stocks extended their rebound, supported by optimism around the “One Big Beautiful Bill,” which includes permanent capital expenditure expensing. Caterpillar and United Rentals were among the month’s top performers, while United Parcel Service and Canadian Pacific Kansas City were among the bottom. Despite the lingering tariff uncertainty, markets are upbeat.

HIND maintains its covered call strategy for added income while staying positioned to benefit from renewed industrial sector momentum.

Outlook | HIND remains exposed to economic cyclicals | Earnings momentum and post-selloff strength suggest resilience | Tariff tensions remain a macro headwind

Harvest Low Volatility Canadian Equity Income ETF

HVOI posted slightly positive gains in July as Canadian markets again hit new highs in the month. Notwithstanding, low volatility strategies trailed more cyclical and growth-oriented factors. Top contributors to the ETF’s outcome included Agnico Eagle Mines, Alimentation Couche Tard (which halted its pursuit of Seven & I Holdings), and Bank of Nova Scotia. The ETF has zero exposure to Shopify and Celestica, which caused it to lag the S&P/TSX Composite Index.

HVOI remains defensively positioned to manage risk. Notwithstanding, it still offers exposure to continued equity market growth and balances stability with participation in upside trends.

Outlook | Strategies focus on stable, dividend-paying Canadian equities | Market turbulence expected to persist | Low-volatility profile may be timely for conservative investors.

Harvest Premium Yield Treasury ETF

Harvest Premium Yield 7-10 Year Treasury ETF

HPYT and HPYM dipped and then recovered with yield changes. The recoveries weren’t enough to outweigh the initial dips and resulted in both ETFs ending the month with slightly negative returns. For July, the ETFs were impacted by:

• • The U.S. yield curve mostly holding steady while edging slightly flatter, reflecting little change in economic expectations and still the likelihood of a “soft landing”; and
  • Expectations for rate cuts by the end of 2025 remain but have slowly dropped below 2 expected cuts as trade agreements hit the news cycle.

Both ETFs use an active covered call strategy to generate income from exposure to bond market volatility, helping investors offset inflation and deliver higher real yields than traditional fixed income.

Outlook | HPYT/HPYM offer high cash flows from writing covered calls I Macro backdrop is challenging for longer dated yields I Flexible covered call strategy helps generate cash flows.

Harvest Diversified Monthly Income ETF

Harvest Diversified Equity Income ETF

HDIF and HRIF delivered modest positive returns in July, outperforming the S&P 500 Equal Weight Index as equity sentiment continued to improve overall. Gains were led by strong performances from HLIF and HIND, as sentiments around Canadian and Industrial equities improved, partially offset by HHL, as negative sentiment in Health Care equities continued.

The ETFs made no significant changes over the month, although took some profits on Canadian equity exposures, which had outperformed, to bring exposures back to model weight.

Outlook | HRIF and HDIF remain defensively positioned with multi-sector exposure and high-income strategies to moderate risk | Existing trade and geopolitical uncertainties justify having a diversified approach.

Harvest Balanced Income & Growth ETF

Harvest Balanced Income & Growth Enhanced ETF

HBIG and HBIE posted slightly positive returns, supported by rising equities, offset slightly by negative fixed income returns in the month. Equity positions contribution to the ETFs’ positive returns were led by HLIF (Canadian Dividends stocks) and HPF (Energy), while rising yields negatively impacted HPYT and HPYM on the fixed income side.

Overall equity exposures were shifted in the month to be more broadly focused, with a reduction to certain sector ETFs. Notable buys included HBF (Brand Leaders) and HVOI (Canadian Low Vol Equities), while HGR (Global REITs) and HHL (Health Care) were among the sells. The resulting allocation offers broader diversification, and an overall robust sector profile.

Outlook | Balanced equity-fixed income structure continues to help buffer downside | Enhanced income and diversification supports resilience.

Harvest Global Gold Giants Index ETF

HGGG was negative for the month of July. This largely reflects the easing of geopolitical fears and calming of tariff tensions, both of which impact gold stock downwards. Notwithstanding, gold is still appealing as a safe-haven asset amid sticky inflation and rising deficits. Also, the loss of Moody’s AAA credit rating for the U.S. has added to gold’s case as a hedge.

HGGG invests equally across the world’s 20 largest gold producers, providing leverage to gold price moves and long-term diversification benefits, especially during volatile market cycles. The ETF will be reconstituted and rebalanced in August.

Outlook | Geopolitical noise and sticky inflation keep gold’s safe haven appeal intact | Gold producers offer upside leverage and margin strength.

Harvest Travel & Leisure Index ETF

TRVL posted a positive return for the month despite a late sell-off that erased some gains from an initial rally:

• • Mixture of quarterly earnings results.
  • Resilient consumer spending and a “soft landing” outlook.
  • Long-term travel demand remains supported by demographic trends despite potential economic headwinds.

TRVL offers diversified exposure to top travel stocks.

Outlook | While some short-term pressure from consumer is cautionary, the sector is well positioned to benefit from secular trends like aging demographics and resilient travel demand I The ETF is poised to benefit from renewed interest in the consumer discretionary.

Harvest Clean Energy ETF

HCLN was up again in the month of July capturing:

• • The strong rally of clean energy stocks in July, outpacing broad market gains even amongst tax cuts being taken away in the “One Big Beautiful Bill”- there appears to be some relief that too much negative sentiment had been priced in; and
  • Long-term clean energy demand underpinned by global climate goals that still require accelerated investment.

HCLN holds the 40 largest dedicated clean energy and equipment firms, equally weighted and diversified across North America, Europe, and Asia. The ETF was reconstituted in July with 5 name changes; Going out were GS Yuasa, Array Technologies, Ameresco, Shoals Technologies and Innergex Renewables. Coming in were Cadeler A/S, Eos Energy, Xinyi Energy, SolarEdge Technologies and Verbio.

Outlook | Massive global clean energy investment needs remain | Long-term drivers are intact | Near-term risks persist under current U.S. administration.

Harvest Low Volatility Canadian Equity ETF

HVOL benefited from the Canadian markets again reaching new highs in the month. Notwithstanding, low volatility strategies trailed more cyclical and growth-oriented factors. Top contributors included Agnico Eagle Mines, Alimentation Couche Tard (which halted its pursuit of Seven & I Holdings), and Bank of Nova Scotia. The ETF has zero exposure to Shopify and Celestica, which caused it to lag the S&P/TSX Composite Index.

HVOL remains defensively positioned to manage risk but still offers exposure to continued equity market growth, balancing stability with participation in upside trends.

Outlook | Strategies focus on stable, dividend-paying Canadian equities | Market turbulence expected to persist | Low-volatility profile is timely for conservative investors.

Blockchain Technologies ETF

HBLK had modest gains in July as blockchain stocks outpaced broader markets and tracked crypto assets.

One of HBLK’s holdings in July, BTCS Inc, skyrocketed on plans to amass Ethereum and its Russell Microcap index inclusion, while Bitfarms surged following a sizable stock buyback and technical breakout signals.

HBLK remains diversified across software, consulting, and blockchain infrastructure, aiming to capture early-stage blockchain growth while balancing risk through structural exposure to enterprise applications.

Outlook | Blockchain’s long-term growth remains intact | Higher large-cap exposure may benefit the portfolio as the crypto cycle matures.

Harvest Bitcoin Leaders Enhanced Income ETF

Harvest Bitcoin Enhanced Income ETF

Both HBTE and HBIX benefited from the surge in enthusiasm in the Bitcoin ecosystem, as Bitcoin outpaced broader equity market.

Two holdings in HBTE recorded strong price appreciation for the month: Galaxy Digital experienced a surge due to record-breaking OTC Bitcoin trades and strong institutional inflows; and Block Inc. saw its stock jumped following its inclusion in the S&P 500, reflecting growing investor enthusiasm for crypto and fintech sectors.

HBIX benefitted from Bitcoin exposure through the iShares Bitcoin Trust ETF. The ETF seeks to enhance income using a covered call overlay on up to 33% of that position, while staying poised for crypto market upside.

Outlook | Accelerated interest in the Bitcoin ecosystem is driving growth | Maturing digital asset class is increasingly being guided by its own fundamental dynamics.

Harvest Diversified High Income Shares ETF

HHIS benefited from the U.S. equity markets that continued to rebound, with growing optimism in Technology in particular. Top contributors included AMDY (which invests in Advanced Micro Devices Inc.), PLTE (which invests in Palantir Inc.), which was boosted by additional defensive spending commitments, and NVHE (which invests in NVIDIA), continuing a strong rebound. NFLY (which invests in Netflix Inc) and COSY (which invests in Costco) were negative detractors for the month.

Despite lower volatility, option premiums stayed elevated, supporting income generation through covered calls written at about 33% across the suite. There were no significant changes to the ETF composition for the month.

Outlook | HHIS continues to offer diversified, enhanced income exposure to high-growth U.S. stocks.

Disclaimer

Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). The funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the relevant prospectus before investing. Tax, investment and all other decisions should be made with guidance from a qualified professional.

Certain statements in this commentary are forward looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. Although the FLS contained herein are based upon what the portfolio manager believes to be reasonable assumptions, the portfolio manager cannot assure that actual results will be consistent with these FLS. Unless required by applicable law, Harvest Portfolios Group Inc. does not undertake, and specifically disclaim, any intention or obligation to update or revise any FLS, whether due to new information, future events or otherwise.