Abstract: The new ETF offers a defensive strategy of conservative growth and income as the economic cycle enters late stages.

Harvest Portfolios Group launched the Harvest Equal Weight Global Utilities Income ETF this month (Jan. 14.)  In a Q&A, Harvest CEO Michael Kovacs explains why the company launched the Harvest Equal Weight Global Utilities Income ETF (TSX: HUTL), the thinking behind the fund and why the fund aligns with the Harvest value strategy of conservative growth and income.

Why is Harvest launching a utilities fund?

The core of Harvest’s philosophy is a combination of income and capital appreciation. We know we are in the late stages of the economic cycle. We don’t know how many innings may be left,  but we do know at some point things will change.  Utilities are traditionally a defensive investment that provide a steady source of income for investors.

What are the ETFs main features?

HUTL is invested in an equally weighted portfolio of 30 of the largest global utilities and communications companies. These include Canadian names most investors would recognize including TransCanada, Enbridge, BCE and Telus. Other holdings include American and European companies who dominate in areas of telecommunications, power generation and pipelines.

The portfolio is rebalanced every quarter and because the fund is equally weighted and passive, it allows for a lower management fee of 0.50%.  The Portfolio Manager can lower volatility by writing call options on selected names to provide additional income.

Who is the fund suitable for?

The ETF is designed for investors seeking diversification with a portfolio of the largest global utilities which offer conservative growth while generating a monthly income stream.

What would be the time horizon for holding the fund?

As with any investment, an investor should be looking at 3 to 5 years or perhaps longer. They might increase or decrease the holding as a percentage of their portfolio depending on the market cycle.

What does the fund compete with?

There are a number of utility ETFs and funds, but HUTL is focused on 30 senior global companies with an equal weight allocation. The Harvest advantage of active option writing generates attractive monthly income.  The management fee is also one of the lowest for comparable ETF mandates in Canada at 0.50 basis points.

For more on the Harvest Portfolio Group, click here.