Harvest Healthcare Leaders Income ETF


November 25, 2019


November 25, 2019


November 25, 2019

TRADITIONALLY, healthcare investing hasn’t held the same representation in Canada as it has around the world. In Canada, it makes up just 2% of the market, while globally, it represents closer to 15%. Because healthcare is a sector with potential for long-term growth, Harvest Portfolios wanted to bring the Canadian market greater access to it in the form of the Healthcare Leaders Income ETF (HHL).

“The Healthcare Leaders Income portfolio brings together 20 of the best leading global healthcare companies,” says Paul MacDonald, CIO at Harvest Portfolios. “It uses our covered call strategy to create more income and is exposed to a diverse group of healthcare companies.”

The healthcare sector’s long-term growth appeal was the driving force behind the fund’s original launch as a closed-end fund in 2014. (It was later converted to an ETF in 2016.) “We look at sectors with long-term growth, and healthcare has more of that than any other,” MacDonald says. “We noticed that there was limited opportunity for investors in the sector, but since it has a sound structural backdrop, that makes it worthwhile.”

Harvest considers healthcare to be structurally sound for three key reasons: An aging population will continue to spend on healthcare no matter the state of the market, developing markets are increasing healthcare spending disproportionately to rising income, and the space is seeing plenty of technological innovation.

Because there are thousands of companies in the healthcare sector, Harvest employs a specific strategy to narrow the field. “We have a proven process to gets that number down to something more manageable,” MacDonald says. “We start with companies that have a minimum US$5 billion market cap and some specific financial criteria, which gets us down to about 75 companies. From there, we actively select 20 that we think are leaders in their subsector and then diversify across those
subsectors so we are not overexposed to any one area in a subsector.”

The process ensures that the fund gains broad exposure, but MacDonald says Harvest will only add a company if it has a proven ability to extract value. This process produces significant benefits for the fund.

“The number one is it provides exposure to a sector with a robust growth upside,” MacDonald says, “and also diversification and, with our covered call strategy, a highly tax-efficient distribution.”

He specifically points to diversification as something that makes HHL valuable to advisors. “All investors want to make sure they have diversity, even in a specific sector,” he says. “You can own the stock of the largest company in a sector, but even it could have something happen to drop its value. So you need to diversify across the space.”

MacDonald adds that the fund adheres to the philosophy that the best offense is a good defence. “Healthcare is such a big component of the global market; it is structurally sound, offers growth and provides defensive characteristics. People are still going to buy their medication in a down market. The advancement of drugs and new devices is amazing. I like to say we are only in the seventh inning of development, which is moving at a rapid pace.”


Source Article: Click Here


For Information Purposes Only. All comments, opinions and views expressed are of a general nature and 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.

You will usually pay brokerage fees to your dealer if you purchase or sell units of the Fund(s) on the TSX. If the units are purchased or sold on the TSX, investors may pay more than the current net asset value when buying units of the Fund(s) and may receive less than the current net asset value when selling them. There are ongoing fees and expenses associated with owning units of an investment fund. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. An investment fund must prepare disclosure documents that contain key information about the fund. You can find more detailed information about the fund in these documents.

Certain statements in the Harvest Blog 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.

FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe 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 as a result of new information, future events or otherwise.

Harvest ETFs Announces Increases to Monthly Cash Distributions

Harvest ETFs announced by press release on June 25, 2024 that certain ETFs will increase their monthly cash distribution amount for all classes taking effect for the July 31, 2024 record date with a payable date of August 9, 2024. For more details, please read the press release.