Harvest’s 5 Market Megatrend ETFs

January 27, 2022

Harvest Portfolios Group’s Exchange Traded Funds (ETFs) focus on growth and income through the ownership of the best global businesses. The strategy offers transparent, easy to understand ETFs with competitive fees. The Harvest Way is as simple as that.

Harvest offers a suite of ETFs divided between equity income-oriented ETFs and equity growth-focused ETFs. The equity growth focused ETFs generally offer more opportunity for capital appreciation. They focus on investable emerging themes and mega-trends which over time can generate powerful returns.

One of those themes is the emerging use of blockchain technology. Harvest’s Blockchain Technologies ETF (TSX:HBLK)  holds companies involved in blockchain applications, that include cloud computing, artificial intelligence, and e-commerce. Another is Harvest Travel & Leisure Index ETF (TSX:TRVL) where demographic trends and consumer preferences across the globe are powering long-term growth for the travel sector. Space exploration and innovation is another massive growth trend captured in a Harvest Space Innovation Index ETF (TSX:ORBT). This ETF includes companies building spacecraft and components as well as those launching and repairing satellites for 5G cellphone communications and internet access. A fourth growth focused Harvest Clean Energy ETF (TSX:HCLN) captures the long-term growth prospects in clean energy . The transition away from fossil fuels is just beginning and will accelerate over the next few decades. As the sector evolves, investments in wind, solar and hydro will grow. The fifth growth focused Harvest Global Gold Giants Index ETF (TSX:HGGG) is a portfolio of gold giants  that holds the world’s largest gold producers offering a hedge against inflation and uncertain economic conditions without undue exposure to the fluctuating price of the commodity.

The companies held in these ETFs follow the Harvest investment philosophy of investing in companies that Harvest has identified with the greatest potential to provide growth opportunities for the specific industry or mega-trend.  These companies are the leaders in their industries and offer a long-term opportunity for investors to grow with them.

Here’s a closer look:

HBLK was launched in 2018 and was Canada’s first blockchain ETF. It holds a cross section of large capitalization technology companies and emerging stand-alone blockchain companies. The ETF’s holdings are designed to evolve as the industry matures.

The power of blockchain lies in its unique ledger-sharing capabilities. Once entries are made to an electronic contract, agreement or shared document, the entries cannot be changed. Everyone can see the transaction details as they are entered and the time. It makes them tamper proof.

So while cryptocurrencies grab headlines, the potential has spread to most sectors. These include governments, insurance, financial services, healthcare, food safety, and transportation logistics. Blockchain is being used to make existing tasks more efficient and less open to fraud.

The wide adoption of Blockchain technologies has resulted in a broadly diversified ETF holding over 50 equities. Just under 25% of assets are in software and tech services while around 20% is in large cap tech companies like IBM and Microsoft. Crypto trading and wallets form just under 20% of the portfolio while Crypto miners and other blockchain companies each hold about 10% of the allocation. The remaining portfolio is split between payment processors, digital assets and services, decentralized finance, and transaction processing.   

This globally diversified ETF holds 30 stocks and captures rising demand for travel in the developing world and increasing leisure in the developed world. TRVL follows the Solactive Travel & Leisure Index.

The industry felt the full force of the pandemic, but the underlying trends are strong. Along with rising global affluence and increasing leisure travel by an older demographic, millennials have arrived. They are looking for experience-related travel and are comfortable using online booking sites which make travel more accessible and affordable.

Currently, hotels, resorts and lodgings including the Hilton and Marriott hotel chains make up the largest component of the ETF. Airlines, mainly U.S.-based, form the second-largest subsector, though the ETF includes Air Canada. The other components are in casinos & gaming, booking sites including Expedia Inc., as well as Cruise lines such as Royal Caribbean, Carnival Corp. and Norwegian Cruise Lines. TRVL’s management fee is 0.40%.

ORBT was launched in 2021 and invests in 40 global companies engaged in the development of products and services related to satellites, space flight, space stations and space tourism. ORBT tracks the Solactive Space Innovation Index.

The holdings include large enterprises that have the financial resources to exploit the opportunity presented by space, as well as those that benefit from spending by governments plus diversified aerospace and defense companies.  The names include Boeing, Airbus, Honeywell, Thales, Northrop Grumman, Lockheed Martin and L3Harris.

These companies are benefitting as governments step back and turn the nuts and bolts of rocket propulsion systems, landing craft, operating systems and launching and maintaining satellites over to the private sector. We see a large opportunity in satellites and related equipment as global demand for high speed internet and cellphone communications grows in coming decades.

Around half of the portfolio is held in diversified space equipment and services. Communications satellites and imaging and other satellites each comprise just below 20% of the ETF while around 15% of the portfolio is allocated to launch and space tourism.

HCLN holds 40 of the largest global clean energy companies by market capitalization. The ETF is equally weighted and rebalanced semi-annually. The long-term drivers fuelling the growth of this sector include: rising global power demand, innovation that has improved clean energy’s cost competitiveness, collaborative global government policies that give incentives for investment, declining costs and rising renewable capacity.

HCLN is focused on renewable power producers and related equipment and services, such as wind turbines and solar panels. Geographically, the current holdings are invested in securities based in North American and Europe, with regional breakdowns of the holdings mainly based in North America and Europe, with select investments in: New Zealand, China, and the U.K. among others.

The Harvest Digital Sports & Entertainment Index ETF was designed to capture the fast-growing universe of digital entertainment, eSports and eGaming. At the same time, through some exposure to traditional sports, the fund is positioned to capture the rapid recovery of traditional sports and the steady convergence between the physical and digital sides of the sports and entertainment universe.

This is a sector ripe for disruption as a new generation finds new ways to enjoy, engage with, and participate in forms of entertainment that have always captured our hearts and minds.

Just over 25% of the portfolio is allocated to iGambling, with a further 20+% in the eGaming space. Sports equipment and apparel forms around 20% while the remainder of the portfolio is in professional sports, event bookings and entertainment and other small subsectors of the sports and digital entertainment universe.

To find out how your clients can benefit from these equity income solutions call 1.866.998.8298.

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Disclaimer

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.) Please read the relevant prospectus before investing. The funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication 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 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.

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