Performance & Risk

At Harvest ETFs, managing volatility is at the core of our investment philosophy. We employ several complementary strategies to balance risk and reward effectively:

Diversified Portfolios:

By investing across various sectors, geographies, and asset classes, our portfolios reduce reliance on any single investment. Diversification helps minimize the impact of poor performance in one area by offsetting it with gains in others, creating a more stable overall performance.

Active Portfolio Management:

Our experienced portfolio managers actively adjust allocations to capitalize on market opportunities and respond to risks. By continuously monitoring economic data, market trends, and geopolitical events, we ensure our portfolios remain aligned with their objectives. This hands-on approach helps improve risk-adjusted returns over the long term.

High-Quality, Cash-Generating Companies:

Harvest ETFs focus on companies with strong financial fundamentals, such as consistent free cash flow, sustainable dividends, and healthy balance sheets. These companies tend to be more resilient during market downturns, providing stability to the portfolio.

Option-Writing Strategies:

Harvest ETFs incorporate covered call option strategies, writing options on up to 33% of the portfolio for its Equity Income line up. This level has been carefully chosen to strike a balance: it generates meaningful additional income while still allowing for significant upside potential. Unlike higher write levels that may overly cap growth, this efficient point on the curve maximizes the benefits of option premiums while retaining most of the portfolio's potential for capital appreciation.

Risk Mitigation Philosophy:

These strategies are designed to reduce volatility and enhance income, but no approach can completely eliminate risk. Market factors such as unexpected economic changes, geopolitical events, or natural disasters may still impact investment performance.

By combining these approaches, Harvest ETFs strive to deliver long-term growth and stability for investors while helping to manage the inevitable uncertainties of the market.

Adding equations and ratios to highlight specific risks can make the disclosure more analytical and informative for investors with a deeper understanding of finance. Here's a revised version: Key Risks to Consider:

• Market Risk: Investment Value=Market Price per Share × Number of Shares
  • Changes in market prices can directly affect your investment value. For example, a 10% drop in the market price translates to a 10% decline in your investment.
• Sector-Specific Risk:
  • Industry-specific volatility can be measured using Beta (βbetaβ), which indicates sensitivity to broader market movements. A high beta (e.g., β>1beta > 1β>1) means the ETF is more volatile than the market.
• Currency Risk:
  • Return Adjusted for Currency=Return in Local Currency×(1 + Exchange Rate Change)
  • For international ETFs, a 5% depreciation in the local currency relative to your home currency can reduce returns significantly.
• Interest Rate Risk:
  • Income-focused securities, like bonds, are sensitive to interest rate changes:
    • ΔP=−D×ΔY
  • Where:
    • ΔP = Change in bond price
    • D = Duration (sensitivity to interest rates)
    • ΔY = Change in yield/interest rates
  • For example, a 2% rise in interest rates for a bond with a duration of 5 years may result in a 10% drop in its price.

Research & Analysis

• Identify investment opportunities through in-depth research on sectors, industries, and companies.
• Monitor global economic trends and market dynamics to guide strategic decisions.

Portfolio Construction

• Build and rebalance diversified portfolios aligned with the ETF's investment mandate (growth, income, or thematic focus).

Covered Call Option Writing

• Actively write covered calls to generate additional income.
• Balance capital appreciation and income generation while adapting strategies to market conditions.

Risk Management

• Mitigate market, sector, and security-specific risks.
• Ensure compliance with regulatory and investment policies.

Active Monitoring & Adjustments

• Analyze and adjust portfolio holdings to align with performance goals and market changes.

Investor & Advisor Communication

• Provide updates on strategy, performance, and market outlook through reports, webinars, and media engagements.

Collaboration

• Partner with analysts, traders, and the Harvest team for efficient execution.
• Work with marketing and client services to deliver investor-focused insights.

For more, explore Harvest ETFs' approach to Covered Call Option ETFs.

Risk tolerance is your ability and comfort level in handling changes in the value of your investments. It's important to remember that a product's risk rating—such as "low," "medium," or "high"—doesn't necessarily mean it’s inherently "safe" or "risky." Instead, it reflects the level of potential price fluctuations.

• Low-Risk Investments: Tend to have smaller price changes over time, offering more stability but often lower returns. Suitable for conservative investors prioritizing capital preservation.
• Medium-Risk Investments: Balance stability and growth potential. They may experience moderate fluctuations, appealing to investors with a longer timeline and willingness to accept some risk for higher returns.
• High-Risk Investments: Often show more dramatic price swings. While these investments are labeled “high risk,” they can also offer substantial growth opportunities over time, depending on market conditions.

For example, a “high-risk” product might not be "risky" for someone with a long-term investment horizon and the capacity to ride out market fluctuations. Understanding your goals, timeline, and comfort with volatility is key to choosing the right investment.

At Harvest ETFs, our wide range of products caters to different risk tolerances, helping you build a portfolio aligned with your personal financial objectives. Always consult with a financial advisor to ensure your investments meet your needs.