HDIF’s portfolio of leaders in a new package


July 24, 2023

By David Wysocki

The Harvest Diversified Monthly Income ETF (HDIF:TSX) has become a widely used investment for passive income seeking Canadians. One of the most popular ETFs launched in Canada in 2022, HDIF combines a portfolio of Harvest equity income ETFs—earning high yields through dividends and covered call options strategies. To deliver a higher yield and more market exposure it adds modest leverage—borrowing roughly 25% of the amount invested in HDIF and investing that borrowed money in the same underlying holdings.

The result is an ETF with a high annualized yield compared to most fixed income or traditional income investments, which is exposed to market growth opportunity from a diverse portfolio of large cap businesses. 

Earlier in 2023 Harvest ETFs followed up on the success of HDIF by launching the Harvest Diversified Equity Income ETF (HRIF:TSX). This ETF accesses the same underlying portfolio of ETFs as HDIF, but does not include a leverage component – offering a one-stop strategy for investors who are less willing to take on leverage-related risk.

Why a non-leveraged version of HDIF could be attractive to some investors and financial advisors

Many investors with different times horizons and risk tolerances may want to limit leverage in their investments. Leverage magnifies both gains and losses. While leverage increases the prospect of higher returns, the risk of losses is also increased. Canadian investors with a lower risk tolerance may still want the diversity and consistent income offered by a product like HDIF but are willing to forego the extra yield and upside opportunity provided by leverage.

Risk management is a key aspect of the work done by Canadian financial advisors as well. As part of their risk management efforts, these advisors may choose to—or be instructed to—avoid investments that include a leveraged component. By using no leverage, HRIF can give those advisors access to a high yield diversified equity income ETF for their clients, without taking on additional leverage-related risk.

It should be noted that the roughly 25% leverage used in HDIF is considered modest and we at Harvest ETFs believe it’s within an acceptable limit for the goals and income needs of many Canadian investors. Nevertheless, some investors see any amount of leverage as too much, and HRIF offers them many of the same benefits delivered by HDIF.


The benefits of an HRIF investment

Much like HDIF, HRIF is designed to deliver consistent monthly income and long-term growth opportunity. It does so by investing in a basket of Harvest equity income ETFs. Each of these ETFs holds a portfolio of leading large-cap companies from different sectors, including healthcare, technology and utilities. That large-cap focus is a core aspect of Harvest ETFs’ investment philosophy. We believe in long-term investing and the steady growth of large businesses over the long-term. Companies that dominate their sectors and markets, that have global reach, and robust financials are the companies we focus on, because we see them as the investments positioned to grow over the long-term.

Each ETF held in the HRIF portfolio also employs an actively managed covered call option strategy which is combined with dividend yields to generate a consistent monthly cash distribution. That covered call option strategy results in an income yield typically higher than most fixed income products. Moreover, because the strategy is actively managed our portfolio managers are able to take advantage of short-term opportunities in options markets to earn higher premiums, the ETF can monetize periods of market volatility and allow for more potential upside capture than a passively managed strategy can.

While leverage plays a key role in the yield and market returns of HDIF that have made it a popular choice for Canadian ETF investors, the core of the HDIF ETF is its allocation to portfolios of leading companies and its covered call option income. In HRIF, Canadian investors and financial advisors get the same core thesis and underlying portfolio holdings without the addition of leverage-related risk.

James Learmonth, CFA

David Wysocki

David Wysocki is the VP of National Sales at Harvest ETFs. He is a seasoned sales executive who began his career as a financial advisor before taking on a sales role to develop the ETF market for a leading Canadian financial institution. David now leads a large team of sales professionals across Canada. He has a deep knowledge of Harvest products and the broader market and regularly presents ETF insights and macro commentaries to Canadian financial advisors.

HDIF has paid high monthly cashflow to Canadian investors

Diversified Monthly
Income ETF


Diversified Equity
Income ETF


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.