Monthly ETF Commentary

September 2025

The end of August marked three straight months of all-time highs for markets in the United States and Canada. Materials led the way for both markets. That was not solely driven by the strength from gold, but also from industrial chemicals. While performance in these sectors tends to be cyclical, there is a sign of broader sector breadth. This has flowed across other segments, benefitting the Harvest Industrial Leaders Income ETF (TSX: HIND).

Markets do not correct, nor do they bottom on valuations. Investors have been in search of a catalyst in the healthcare sector given the attractive valuations. In August, Warren Buffett added a significant amount of UnitedHealth to Berkshire Hathaway’s portfolio. This inspired a reprieve for healthcare, sparking a run that made it the second-best performing sector for the month.

As at the end of August, the S&P/TSX Composite Index has outpaced the S&P 500 for the past five years. Gold stocks have played a big part in that outperformance, but we have seen breadth across large caps.

Canadian single stock ETF innovations

Harvest ETFs recently crossed the $2.5 Billion assets under management (AUM) mark for its High Income Shares™ ETF suite. It now stands as the largest suite of single stock ETFs in the Canadian market.

Last month, we introduced Harvest Canadian High Income Shares ETFs. These 10 single stock ETFs represent established and leading Canadian companies. We also launched a one ticket solution: The Harvest Canadian High Income Shares ETF (TSX: HHIC). HHIC offers exposure to all 10 of the Canadian High Income Shares companies, overlayed with covered calls and modest leverage. Canadian High Income Shares are built to generate high yield, every month.

Federal Reserve snapshot

There has been significant focus on the Fed ahead of a key interest rate decision set to take place during the FOMC meeting on September 16-17, 2025. Instead of the decision, headlines have been focused on the potential threats to an independent central bank.

The Federal Reserve sets overnight rates, which ripple into longer-term bond yields through inflation and growth expectations. There are concerns that the regional bank presidents up for renewal, and the controversy surrounding Trump’s attempted dismissal of Governor Lisa Cook, could jeopardize the perception of the Fed’s independence. That, in turn, could unsettle markets.

Beyond AI – Under the media covers

Bears have been quiet in what has been a frothy market since the middle of the spring season. In August, we saw the large-cap basket of AI-related equities down modestly after dominant leadership through most of the spring and summer. Our investment team sees this as natural profit taking in select names. There are still strong tailwinds for the overall AI build out going forward.

AI demand is global, and there are peripheral areas that stand to benefit. For example, data centers like those in Singapore, Europe, and the US. That has developed strong interest for data center-related REITs, and for global utilities like those in the Harvest Equal Weight Global Utilities Income ETF (TSX: HUTL). HUTL has continued its relative outperformance, largely due to developed global markets and the AI build out.

What to expect for the rest of 2025

The Harvest Diversified High Income Shares ETF (TSX: HHIS) that currently provides exposure to 15 dominant US companies has recently reached above $800 million in AUM. We are looking to expand our High Income Shares ETF suite to provide investors with more choices and have recently filed a preliminary prospectus for five single stock ETFs that offer exposure to these exciting US stocks: Circle, JPMorgan, Reddit, Robinhood, and SoFi!

Circling back to the market, investors can expect to see pockets of volatility. Some valuation gaps will widen in this climate. Meanwhile, we continue to believe that layering in some defensive exposure and diversity remains key as we navigate the upcoming fall earnings season.

Harvest Healthcare Leaders Income ETF

Healthcare posted a strong return for the month of August and was the second best performing sector in the broader market. The ETF continues to operate in an environment where:

• • Valuations are compressed and at levels rarely seen in the past 30 years, driven by policy uncertainty and negative sentiment.
  • In search of a catalyst, during the month Warren Buffet announced it was acquiring shares of managed care company UnitedHealth Group Inc.
  • This caused the managed care companies to rally between 10%-25% and served as a shorter-term catalyst for some reprieve across the sector during the month.

Due in large part to the macro headwinds, including policy-driven volatility, valuations remain compressed.

Outlook | Despite short-term volatility and policy-driven pressure on the sector, the long-term fundamentals remain solid, driven by: Aging populations, developing nations, and technological innovation | HHL provides steady monthly income and remains one of the top performing ETFs in the healthcare ETF group.

Harvest Brand Leaders Plus Income ETF

HBF rose in August, outpacing returns for large cap U.S. indexes. The factors that boosted the ETF’s investments during August were:

• • Optimism over renewed expectations for a resumption of the interest rate cutting cycle in September by the Federal Reserve.
  • UnitedHealth Group rallied sharply after Warren Buffet-led Berkshire Hathaway disclosed a new position in the stock while shares of Alphabet Inc. continued to rally. Shares of Oracle and Microsoft fell in August following several months of strong gains on AI optimism
  • Concerns of an economic slowdown in the second half have resurfaced following significant downward revisions to U.S. employment numbers in August.

The ETF maintained its covered call strategy, as it continues its focus on balancing income generation with participation in equity upside.

Outlook | Ongoing tariff uncertainty and macroeconomic concerns kept markets volatile | Equal weight and specific value-, quality- & yield-based financial metrics can help in current environment with ongoing rotations.

Harvest Tech Achievers Growth & Income ETF

HTA generally traded sideways through the month following several months of strong returns off the April lows. Of note, we saw:

• • Technology stocks lagged the broader market in August as stocks consolidated the strong gains experienced since the April market lows.
  • AI-levered firm Arista Networks Inc. continued to rally, while shares of Motorola Solutions Inc. rebounded following a strong earnings report, Shares of Oracle Corp declined during the month following several months of strong returns while Intuit Inc. fell following earnings results that beat expectations but gave guidance for the 2026 fiscal year that disappointed investors.

HTA uses covered calls to generate income while remaining positioned to capture growth potential in leading tech names. 

Outlook AI-driven tech demand continues | Equal weight can help to avoid over concentration I HTA is positioned in large-cap tech leaders and writes call options to support steady income.

Harvest Equal Weight Global Utilities Income ETF

HUTL posted another positive return in August. While the overall U.S. Utilities sector was down for the month, the ETF benefitted from the European Telecom exposure and strong performance in select North American Telecoms and Pipeline holdings.

Outside of the volatility witnessed in April, 2025 has been a very positive one for Utilities stocks. Two of the more important factors influencing Utilities in August included:

• • Shorter term yields have moved lower with rate cut expectations, but long end yields have concerns, particularly with Fed independence.
  • The AI boom continues, which highlights growing electricity demand, offering a medium-term tailwind for the sector.

HUTL’s portfolio of 30 top utility, telecom, and pipeline companies offers a balance of defensive income generation while capturing potential upside. The portfolio is supported by a covered call overlay to boost monthly cash flows.  The ETF was reconstituted with Edison International and Verizon positions exited with their yields entering the top 10^th percentile – they were replaced by the next largest names in the universe, Tele2 AB and BCE Inc.

Outlook | HUTL is well-positioned in uncertain markets and for AI energy demand tailwinds I Can provide steady cash flows amidst broader macro uncertainty I HUTL remains a leading utility ETF in Canada.

Harvest Global REIT Leaders Income ETF

HGR was up during the month, which mimicked the overall performance of the REITs sub-sector, albeit lagging the broader market. Its performance was mixed, with some International and Growth-tilted REITs pulling back, while Value-tilted REITs gained, like Office, Health Care and Retail.

HGR remains broadly diversified across global REIT subsectors, offering exposure to growth-oriented assets with value plays like office and healthcare REITs. This approach helps manage macro uncertainty while targeting consistent income from global real estate leaders. There were no changes during the latest reconstitution.

Outlook | Global REITs face headwinds from rate uncertainty and trade tensions | HGR’s diversified tenant and lease exposure offers resilience I HGR is positioned to benefit from exposure to growth themes like data warehouses & online shopping trends with industrial warehouses globally.

Harvest Energy Leaders Plus Income ETF

HPF and broader Energy stocks were positive for August. This was led by the Refining & Marketing sub-segment. The energy stocks diverged notedly from the underlying crude oil price which traded lower. The two catalysts from late last month that impacted crude negatively were:

• • Trade agreement news faded from the headlines; and
  • The US gave up on its Russian/Ukraine ceasefire deadline and had a friendly meeting with Putin in Alaska

HPF continues to balance exposure to large-cap energy names with a covered call strategy to generate income.

Outlook | Oil markets face macro and supply-side instability | HPF retains quality energy names aligned with long-term capital discipline and yield strength.

Harvest US Bank Leaders Income ETF

HUBL recorded positive return for August driven by:

• • S. bank stocks rallying during the month on renewed expectations for a resumption of the interest rate cutting cycle by the Federal Reserve in September, which could lead to a steepening in the yield curve, a positive driver for bank profitability
  • Regional banks outperformed the mega-cap universal banks during the month given their typically greater leverage to growth in net interest income, which is expected to benefit should the Fed resume its rate cutting cycle in the near term.

 HUBL maintains a covered call strategy for income. It remains positioned to benefit from renewed investor confidence in the banking sector as risks around tariffs and policy uncertainty eased.  The fund was rebalanced in August, but no changes were made to portfolio constituents.

Outlook | The US Federal Reserve Bank’s rate expectations and loan growth outlooks will shape returns | Covered calls can help manage risk in a volatile macro banking environment.

Harvest Canadian Equity Income Leaders ETF

Feels like Groundhog Day, but HLIF was up strong again on new record highs in the overall Canadian markets:

• • Canadian equities reached new highs in August as tariff escalations continue to fade from the headlines despite tariffs on Canada eventually being set at 35%.
  • Banks, telecoms, and energy outperformed, while Retail names like Restaurant Brands and Canadian Tire weighed on performance.

The ETF focuses on Canada’s top dividend payers, refreshed quarterly. The portfolio’s covered call overlay can help to support stable monthly income in a mixed economic environment. The ETF will be reconstituted and rebalanced in September.

Outlook | Equal weight and dominant oligopolistic-like companies in the Canadian market | The portfolio remains focused on size & yield in domestic market I HLIF is positioned defensively & favours stable cash flow names.

Harvest Travel & Leisure Income ETF

Despite the initial pullback that started at the end of last month, TRVI posted a positive return for August. This was underpinned by:

• • Casino resorts, cruise lines and airlines strength
  • Resilient consumer spending and a “soft landing” outlook
  • Long-term travel demand remains supported by demographic trends despite potential economic headwinds

TRVI offers diversified exposure to top travel stocks and overlays a covered call strategy to generate income. It hedges its U.S. dollar exposure and seeks to enhance yield while reducing individual stock risk.

Outlook | While some short-term pressure from consumer is cautionary, the sector is well positioned to benefit from secular trends like aging demographics and resilient travel demand.  I The sector is poised to benefit from renewed interest in consumer discretionary.

Harvest Industrial Leaders Income ETF

HIND posted a positive return in August, as select industrial stocks held in the ETF generally extended their rebound from the April lows, supported by optimism around the “One Big Beautiful Bill” which includes permanent capital expenditure expensing.

Key drivers for the month included:

• • Shares of Delta Air Lines Inc. rose during the month as concerns about slowing travel demand ebbed. United Rentals Inc. continued its strong rally off the April market lows
  • Shares of Deere & Co. came under pressure following indications from management that it may take longer than expected for the agriculture equipment cycle to turn higher. Shares of Eaton Corp. PLC also fell after management gave forward earnings guidance that was seen as disappointing by investors, despite strong results in the latest quarter

 HIND maintains its covered call strategy for added income while staying positioned to benefit from renewed industrial sector momentum.  The Fund will be rebalanced during the month of September.

Outlook: HIND remains exposed to economic cyclicals | Earnings momentum and post-selloff strength suggest resilience | Tariff tensions remain a macro headwind

Harvest Low Volatility Canadian Equity Income ETF

HVOI posted positive gains in August as Canadian markets continued to break fresh highs. Top contributors to the ETF’s outcome included Agnico Eagle Mines, Bank of Nova Scotia, and TC Energy. The ETF has zero exposure to Shopify and Barrick Gold, which caused it to lag the S&P/TSX Composite Index.

HVOI remains defensively positioned to manage risk. Nonetheless, it still offers exposure to continued equity market growth and balances stability with participation in upside trends.

Outlook |Continued focus on stable, lower risk portfolio of Canadian equities | Market turbulence expected to persist | Low-volatility profile may be timely for conservative investors.

Harvest Premium Yield Treasury ETF

Harvest Premium Yield 7-10 Year Treasury ETF

HPYT and HPYM inched higher on the month, with HPYM outperforming, as the yield curve continues to steepen. The path for long bonds has been a volatile and difficult. For August, the ETFs were impacted by:

• • The U.S. yield curve steepening, reflecting near-term expectations for rate cuts adding to positive moves for short and mid-duration bonds, while the long-term bond traders worry more about debt sustainability, inflation and Fed independence; and
  • Expectations for rate cuts by the end of 2025 shifted back to confidence in at least 50 bps of cuts with growing confidence there could be 75bps of cuts.

Both ETFs use an active covered call strategy to generate income from exposure to bond market volatility, helping investors offset inflation and deliver higher real yields than traditional fixed income.

Outlook | HPYT/HPYM offer high cash flows from writing covered calls I Macro backdrop is challenging for longer dated yields I Flexible covered call strategy helps generate cash flows.

Harvest Diversified Monthly Income ETF

Harvest Diversified Equity Income ETF

HDIF and HRIF delivered solid positive returns in August, outperforming the S&P 500 Equal Weight Index as equity sentiment continued to improve overall. Gains were led by strong performances from HHL, as Health Care bounced back over the month, and TRVI (Harvest Travel & Leisure Income ETF), as sentiments continued to improve.  All of the ETFs held in the portfolio made positive returns over the month, reflecting broad gains in the market.

The ETFs made relatively minor adjustments in the period, selling HUTL (Harvest Equal Weight Global Utilities Income ETF) on strength, and buying HTA (Harvest Tech Acheivers Income ETF.

Outlook | HRIF and HDIF remain defensively positioned with multi-sector exposure and seek to deliver consistent monthly income   | Existing macro and policy uncertainties justify having a diversified approach.

Harvest Balanced Income & Growth ETF

Harvest Balanced Income & Growth Enhanced ETF

HBIG and HBIE posted positive returns in the month, supported by rising equities. Equity positions contribution to the ETFs’ positive returns were led by HHL, as Health Care bounced back over the month, and TRVI (Harvest Travel & Leisure Income ETF).All of the ETFs held within the strategies had positive performance on the month, reflecting broad strength in markets overall.

The ETFs made no significant adjustments in the month and remain focused on a well-diversified sector mix.

Outlook | Balanced equity-fixed income structure continues to help buffer downside | Enhanced income and diversification support resilience.

Harvest Global Gold Giants Index ETF

HGGG invests equally across the world’s 20 largest gold producers, providing leverage to gold price moves and long-term diversification benefits, especially during volatile market cycles. The ETF was rebalanced in August with no changes to the names.

Outlook | Geopolitical noise and sticky inflation keep gold’s safe haven appeal intact | Gold producers offer upside leverage and margin strength.

Harvest Travel & Leisure Index ETF

Despite the initial pullback that started at the end of last month, TRVL posted a positive return for August. This was underpinned by:

• • Casino resorts, cruise lines and airlines
  • Resilient consumer spending and a “soft landing” outlook.
  • Long-term travel demand remains supported by demographic trends despite potential economic headwinds.

TRVL offers diversified exposure to top travel stocks.

Outlook | While some short-term pressure from consumer is cautionary, the sector is well positioned to benefit from secular trends like aging demographics and resilient travel demand I The ETF is poised to benefit from renewed interest in the consumer discretionary.

Harvest Clean Energy ETF

HCLN held gains in the month of August capturing:

• • The gain of clean energy stocks, particularly the outperformance of solar stocks, like Sunrun, Solaria Energia, First Solar, and SolarEdge. – these offset some of the drag from utilities and the wind company Orsted, which has been hit by Trump blocking its wind project; and
  • Long-term clean energy demand underpinned by global climate goals that still require accelerated investment.

 HCLN holds the 40 largest dedicated clean energy and equipment firms, equally weighted and diversified across North America, Europe, and Asia.

Outlook | Massive global clean energy investment needs remain | Long-term drivers are intact | Near-term risks persist under current U.S. administration.

Harvest Low Volatility Canadian Equity ETF

HVOL posted positive gains in August as Canadian markets continued to break fresh highs. Top contributors to the ETF’s outcome included Agnico Eagle Mines, Bank of Nova Scotia, and TC Energy. The ETF has zero exposure to Shopify and Barrick Gold, which caused it to lag the S&P/TSX Composite Index.

HVOL remains defensively positioned to manage risk. Nonetheless, it still offers exposure to continued equity market growth and balances stability with participation in upside trends.

Outlook | Continued focus on stable, lower risk portfolio of Canadian equities | Market turbulence expected to persist | Low-volatility profile may be timely for conservative investors.

Blockchain Technologies ETF

August saw volatility in blockchain equities and crypto assets. Ethereum peaked at $4,955 mid-month before retreating to $4,390, while Bitcoin pulled back slightly.

Sentiments for sector were influenced by Macro factors, including Jackson Hole developments, central bank signals, and geopolitical uncertainty. On August 14th there was a significant pullback in space, triggered by profit-taking, as well as inflation data that tempered hopes for a rate cut.

Key Highlight: Terawulf Inc. (WULF): Rose 43% after securing long-term high-performance computing agreements with Google-backed Fluidstack. HBLK removed Argo Blockchain (ARBK) as it no longer met the fund’s investment mandate due to its low share price and operational risks, ensuring alignment with portfolio objectives. 

Outlook | Blockchain growth remains constructive. Ethereum adoption, staking rewards, and enterprise integration support long-term potential. HBLK’s diversified positioning and selective large-cap exposure aim to provide resilience amid ongoing volatility.

Harvest Bitcoin Leaders Enhanced Income ETF

August saw volatility in crypto assets.  Bitcoin hit an all-time high in mid-august before pulling back into month-end. Macro factors, including Jackson Hole developments, central bank signals, and geopolitical uncertainty, influenced sentiment. This included a significant pullback on August 14th, triggered by profit-taking and inflation data that tempered hopes for a rate cut.

Key Highlight: Terawulf Inc. (WULF): Rose 43% after securing long-term high-performance computing agreements with Google-backed Fluidstack.

Outlook | HBTE remains constructive. The fund’s exposure to high-growth mining and infrastructure companies is well-aligned with the broader sentiment of increasing institutional adoption of Bitcoin. Continued developments in the sector, coupled with the fund’s active management and covered call strategy, aim to provide resilience and ongoing income generation amid potential market fluctuations.

Harvest Bitcoin Enhanced Income ETF

HBIX benefitted from Bitcoin exposure through the iShares Bitcoin Trust ETF. The ETF seeks to enhance income using a covered call overlay on up to 33% of that position, while staying poised for bitcoin upside.

Harvest Diversified High Income Shares ETF

HHIS was slightly down for the month of August on a net asset value (NAV) per unit basis, as the higher-growth technology stocks came under pressure during the month.

Positive contributors for HHIS were APLE (which invests in Apple), GOGY (which invests in Alphabet Inc.), and TSLY (which invests in Tesla), although these were overshadowed by negative contributors including MSTE (which invests in Strategy Inc), and CNYE (which invests in Coinbase), which were both negatively impacted by the price of  Bitcoin falling by  6% for August, after months of gains.

Option premiums remained well supported. The income generation through covered calls writing remained at around 33% write-level across the suite. There were no significant changes to the ETF composition, but we took the opportunity to capitalize on the weakness in the healthcare sector, by increasing exposure to LLHE (which invests in Eli Lilly), while trimming exposure to PLTE (which invests in Palantir).

Outlook | HHIS continues to offer diversified, enhanced income exposure to high-growth U.S. stocks.

Disclaimer

Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). The funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the relevant prospectus before investing. Tax, investment and all other decisions should be made with guidance from a qualified professional.

Certain statements in this commentary 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. Although the FLS contained herein are based upon what the portfolio manager believes 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 due to new information, future events or otherwise.