By Ambrose O’Callaghan
Utilities are services, such as lighting, heating, and water. These are provided and paid for by all citizens. The nature of these essential services means they are made available and consumed regardless of the market and economic conditions. So, for the Canadian investors, owning utilities stocks is a good defensive posture for a portfolio. But having the right exposure mix is always the winning solution.
Utilities: A standout entering 2026
In 2024, we presented the thesis that the utilities space offered an opportunity play after a stretch of underperformance in 2022 and 2023.
That thesis was proven correct. The momentum for the sector stretched through 2025. One of the biggest drivers for the utilities sector in the first half of the 2020s has been the peak in the interest rate hiking cycle. Central banks rate hiking peaked in 2023, which was in line with our expectations.
Previously, we’d discussed why an easing rate environment was a potential positive for global utilities. The Fed has aimed to stick a soft landing by execution monetary easing going forward. Long bond yields were little changed, but remain closer to the 5% mark, and did not act as any headwind. Ultimately, it appears the Fed has avoided triggering a broader economic slowdown. Central banks are still navigating through a difficult period as trade uncertainty and the impact of tariffs weighs on the global economy.
Historically, Utilities have proven resilient in steeper market sell offs. However, negative returns in absolute terms are unlikely to be avoided. A covered call writing strategy can add cushion to that potential volatility.
What’s the makeup of your exposure to utilities? Having only Canadian utilities, which are dependable and highly profitable, in a portfolio, do not deliver on the benefits that a globally diversified utilities fund can provide. This is why Harvest created the Harvest Equal Weight Global Utilities Income ETF (HUTL: TSX) as a perfect solution to fill the gap. It offers investors exposure to a diversified portfolio of global utilities. HUTL not only delivers growth potential to investors but provides high income, every month, through the application of Harvest’s covered call writing strategy.
The exposure to global utilities sets HUTL apart from its Canadian peers. But what do these global utilities offer, particularly those based in the United States, that gives HUTL the competitive edge as an investment solution in the utilities space?
How the AI revolution is helping to bolster utilities
The growth of generative AI, and the explosion of demand for its services, has laid a new burden on our modern infrastructure. Chat GPT, the sophisticated AI chatbot that was released to the public by Open AI in November 2022, was quickly adopted by huge swaths of t he population for day-to-day tasks. These include generating ideas, composing emails, proofreading content, writing code, the list goes on.
BLOOM is the world’s largest open multilingual large language model (LLM). Scientists have estimated that training the BLOOM AI emits roughly 10 times more greenhouse gases than the average French citizen in an entire year. More complex queries or requests lead to more energy consumption. For example, generating an image or video is far more energy intensive than an image classification or lines of text. The chart below illustrates the variance in energy consumption to tasks.
Energy Consumption of Generative AI Models
Source: “Generative AI: Energy Consumption Soars”, Polytechnique Insights. November 13, 2024.
In a November 2025 research note, Goldman Sachs projected that data center power demand could surge 175% by 2030 compared to the levels seen in 2023. That is the equivalent of adding another Top 10 power consuming country.
This surge in energy consumption has contributed to a ramp up in power demand. Utilities are well-positioned to benefit in this environment. Another Goldman Sachs piece estimates that current demand for AI could grow from 13% of the overall market to 28% by 2027.
Forecast for Global Data Center Demand
Source: Goldman Sachs Research, “How AI is Transforming Data Centers and Ramping Up Power Demand.” https://www.goldmansachs.com/insights/articles/how-ai-is-transforming-data-centers-and-ramping-up-power-demand
Goldman Sachs Research is projecting that data center demand will grow by about 50% to 92 gigawatts (GW) by 2027. That would represent a compound annual growth rate of 17% between 2025 and 2028. Even in a downside scenario, Goldman Sachs is projecting a growth rate of 14%. More bullish scenarios are forecasting a compound growth rate that could reach 20%.
The benefits of a global utilities portfolio
HUTL provides investors access to these powerful trends. US electricity demand is being fueled by the AI boom. Moreover, data center markets are concentrated heavily in the United States, Asia, and Europe. HUTL focuses on a portfolio of global utilities, providing access to this burgeoning space. The portfolio of HUTL offers investors exposure to a diversified portfolio of global utilities, including telecommunications companies, pipeline issuers, and more.
Global Utilities also help to diversify a lot of the risks that investors may not initially consider. You have the benefits of the market risk side. A global portfolio helps to diversify away markets that move in different directions at different times. Interest rate risk also diverge in different countries at varying times. Utilities are heavily impacted by interest rates as a yield-sensitive sector.
Natural disaster risk is also mitigated by diversifying out with a geographically diverse portfolio of utilities, as these are large, fixed-in-place real assets.
Moreover, there is regulatory risk diversification. By investing in multiple countries, you have the added benefit of flattening out your concentration in any one political or regulatory regime. Ultimately, you don’t want to put all your eggs in one basket.
HUTL | Growing Monthly Income and Strong Performance
In addition to its exposure to that development, HUTL also employs an active covered call writing strategy to support its monthly income distribution.
On January 23, 2026, Harvest ETFs announced an increase to monthly cash distributions for its core ETFs. HUTL now offers a monthly cash distribution of $0.13 per unit.
Annualized Performance
As at January 31, 2026
| Ticker | 1M | 3M | 6M | YTD | 1Y | 2Y | 3Y | 4Y | 5Y | 6Y | 7Y | SI |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| HUTL | 4.37 | 4.59 | 7.59 | 4.37 | 19.18 | 18.02 | 11.22 | 7.47 | 9.47 | 5.24 | 6.88 | 7.09 |
Global utilities enhanced | HUTE
Investors who want even higher levels of income and growth potential may want to consider the Harvest Equal Weight Global Utilities Enhanced Income ETF (HUTE:TSX). This ETF offers exposure to the same portfolio of global utilities and a covered call strategy, while employing modest leverage at approximately 25%. HUTE recently hiked its monthly cash distribution to $0.095 per unit.
Annualized Performance
As at January 31, 2026
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