Covered Call Option ETFs
Generate Cashflow – Monetize Market Movement
Harvest ETFs is a market leader in call option ETFs. These ETFs, also called equity-income ETFs, or covered call ETFs, generate cashflows for unitholders from a portfolio of equities-stocks-combined with a covered call option writing strategy. Harvest launched its first ETFs in 2016 and has established itself as one of the top option writing firms in Canada. We use an active and flexible call option strategy to build high yield ETFs that pay monthly distributions and still capture the opportunity for market growth. Watch this helpful explainer to learn more about equity income.
Total distributions paid by Harvest Equity Income ETFs since ETF inception October 2016 to August 2023
An Active and Flexible Covered Call Strategy
At Harvest ETFs we use an Active & Flexible Covered Call Option Writing Strategy. But what is a call option, and how does an active and flexible call option strategy work?
To learn what a call option is read our interactive guide here.
A key dynamic of call option ETFs is a trade-off between income generation and the portfolio’s exposure to market growth opportunity. Writing options on a higher percentage of the portfolio means it is less exposed to market growth.
Many passively managed call option ETFs write options on the same percentage of their holdings every month.
Harvest ETFs’ actively managed strategy gives portfolio managers the discretion to sell call options on any amount of an ETF’s holdings, up to our 33% limit rate. The managers can take advantage of higher options premiums in certain market conditions and sell call options on a smaller percentage of an ETF’s holdings. This exposes more of the ETF’s holdings to market growth opportunities than a passively managed covered call ETF could.
Harvest Equity Income ETF portfolios are invested in companies that are well-established, with strong balance sheets and consistent earnings growth. We generate steady income by collecting dividends and by selling call options to generate a premium on a portion of the portfolio. This strategy provides the ability to pay attractive, tax-efficient, monthly distributions for our investors.
Harvest’s equity income ETFs focus on large-cap companies, the leaders of their industries
Income generated with covered call options is taxed as capital gains – a lower rate than typical income
The monthly income paid by these ETFs are high-often higher than the rate of inflation
Harvest Equity Income ETFs can be held in registered accounts which can be tax efficient as investors save
Why Use Call Option ETF for Income Now?
Markets shift up and down every day but call option ETFs give investors the surety of consistent monthly income. An active and flexible covered call option strategy will also allow investors to capture more upside opportunity in certain market conditions while meeting their income needs.
Example of Harvest ETFs & Their Yields
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For Information Purposes Only.
Commissions, management fees and expenses all may be associated with investing in HARVEST Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account income taxes payable by any securityholder that would have reduced returns. Please read the relevant prospectus before investing. The funds are not guaranteed, their values change frequently and past performance may not be repeated. The information contained herein should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies. Tax, investment and all other decisions should be made with guidance from a qualified professional. Certain statements included in this communication constitute forward-looking statements, including, but not limited to, those identified by the expressions “expect”, “intend”, “will” and similar expressions to the extent they relate to the Investment Fund. The forward-looking statements are not historical facts but reflect the Fund’s, Harvest and the Manager of the Fund’s current expectations regarding future results or events. These forward looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although the Fund, Harvest and the Manager of the Fund believes that the assumptions inherent in the forward-looking statements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. The Fund, Harvest and the Manager of the Fund undertakes no obligation to update publicly or otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.