Monthly ETF Commentary

October 2025

This past September was less Green Day and more Earth, Wind, & Fire. Investors were given a reason to dance as the cloudy days were few and far between. The market was able to avoid the usual seasonal jitters that strategists expected, with both the United States and Canadian markets climbing to new all-time highs.

In this review, we will look back at a bull market that continues to capture ever broadening sectors of the market. We will also dig into some key macro and technical indicators influencing the current valuation debate. To wrap things up, we will share a few portfolio updates from Harvest’s impressive product lineup and highlight some current and upcoming insights pieces that might be worth your attention.

Bull market broadening

The success for both the US and Canadian markets charts four consecutive months of record highs. That goes beyond momentum. This is a confident market, and one that is seeing broadening participation among varying sectors.

In Canada, it is not just the Toronto Blue Jays that are hitting grand slams. The materials sector has benefited from the continued rally in gold equities. That, in turn, has bolstered our Harvest Global Gold Giants Index ETF (TSX: HGGG). Meanwhile, a supply disruption of nearly 3% of global copper had other materials stocks also participating in the bull market.

More Canadian sectors have started to participate in this rally. That is a healthy sign for the overall market. We have seen strong participation in our Harvest Canadian Equity Income Leaders ETF (TSX: HLIF) and our low volatility ETFs, the Harvest Low Volatility Canadian Equity ETF (TSX: HVOL) and the Harvest Low Volatility Canadian Equity Income ETF (TSX: HVOI).

In the United States, the technology sector has continued its dominant run. However, the story is broadening across sectors.

Some investors are starting to raise questions. Chief among them: Can this growth last? With stock prices at all-time highs, the conversation is turning to the macro environment, technical indicators, and equity valuations.

Macro, technical indicators, and sentiment

The Harvest investment team has made modest changes to their internal dashboard. For example, risks from government and central bank decisions remain at high levels. On the positive side, inflation is trending lower and confidence is up. Job growth has slowed slightly, a sign that the economy may be cooling. Meanwhile, stock valuations and profit forecasts have been rising.

What has been driving the markets? We can view it through two measures:

First, market cap weighted. This gives more weight to giants like Nvidia and Apple. The second; equal weighted. This measure treats every stock the same. When the market-cap weighted index is nearly double the equal-weighted index, that tells us a handful of mega companies are powering most of the returns.

From a technical analysis standpoint, the magnitude of the spread over the 200-day moving average, and the duration it has been there, is not unprecedented. That is more so the case for the equally weighted index. So, are stocks too expensive?

The valuation debate in 2025

At first glance, overall market valuations are elevated measured by price-to-earnings ratios. However, there is a good reason for this: profit forecasts are consistently rising. Companies are expected to earn more, which justifies a higher share price.

The top hyper-scalers in the US – companies like Amazon, Microsoft, Google – possess research and development (R&D) budgets that are larger than the R&D budget of all of Europe’s combined companies. It will take time to see the benefits of this enormous capital expenditure.

Meanwhile, the equal-weighted perspective gives us a different view. Outside of the largest tech giants, the average stock is not overly expensive. From this, we can see a “barbell” market. Some sectors are expensive, and other sectors offer great value at this stage. This is why diversification is so important.

Having some “barbells” in portfolios allows investors to have exposure to both high-growth and more defensive areas and factors. The recent spike in the healthcare sector is a perfect example. With valuations so low, news like the Buffett purchase of UnitedHealth drove healthcare equities upward. While it is too early to call this a trend, it reminds us that value-hunting in the market can quickly be rewarded.

Portfolio updates and new insights

This week, we launched the USD version of the Harvest Diversified High Income Shares ETF (TSX: HHIS.U). This is the US dollar version of our popular HHIS strategy.

Earlier, we announced four new single stock ETFs to our High Income Shares™ lineup. These offer exposure to Circle, Reddit, Robinhood, and SoFI.

In the month ahead, keep an eye on upcoming insights on healthcare, the yield curve, and the anatomy of option pricing.

Harvest Healthcare Leaders Income ETF

HHL posted a positive return for the month of September following the strong August, although it lagged the broader market that was driven by the resumption of tech and tech like leadership.

Valuations remain compressed and at levels rarely seen in the past 30 years, driven by policy uncertainty and negative sentiment.  However, in August, Warren Buffet announced it was acquiring shares of managed care company UnitedHealth Group Inc. This served as a shorter-term catalyst for some reprieve across the sector during the month of August.

Sentiment, however, slowly waned over the course of September as few new catalysts surfaced, and the sector was in fact in the negative until the last two days of the month.  While there have been several announcements of reshoring of pharma manufacturing to the U.S. over recent months, an additional announcement late in September coupled with a preliminary agreement on certain drug pricing concessions for specific drugs within Medicaid, a relatively small component of overall drug spending, was met with strong positive moves across the sub-sector.  Although the announcement has modest fundamental implications, we view it as an incremental positive for improved sentiment.

The implied volatility for the underlying holdings has seen a significant uptick through early October.  This sets stage for a very active month for the ETF’s options strategy.

Outlook | Despite short-term volatility and policy-driven pressure on the sector in the short term, 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 over the past 5 years.  Improving sentiment is a key near term catalyst.

HHL invests in 20 large-cap healthcare leaders, has an active covered call strategy and pays a monthly distribution of $0.06 per unit.

Harvest Brand Leaders Plus Income ETF

HBF rose in September along with large cap U.S. indexes.  Factors that impacted the ETF’s investments during September included:

• • Optimism stemming from resumption of the interest rate cutting cycle in September by the Federal Reserve.
  • Investors continued rally behind AI investment themes
  • Sharp rally in United Healthcare stock after issuing a positive outlook for quality ratings of its Medicare Advantage plans. In addition, Caterpillar shares rallied based on expected demand for electric generators to meet power demand for AI datacenters

 The ETF maintained its covered call strategy, as it continues its focus on balancing income generation with participation in equity upside.  The ETF is scheduled to be rebalanced during the month of October.

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 rose in September as investors continued to rally around the AI investment theme. Overall, technology stocks led the broader market in September as stocks resumed the rally off the April market lows. Stocks within Semiconductor and Hardware continued lead the sector as the largest perceived beneficiaries of AI infrastructure investments over the intermediate term.

Within the portfolio, memory semiconductor producer Micron Technology rose sharply along with Oracle and semiconductor equipment manufacturer Applied Materials, while shares of semiconductor design software company Synopsys fell sharply following a disappointing earnings announcement.

HTA uses covered calls to generate income while remaining positioned to capture growth potential in leading tech names.  The ETF is scheduled to be rebalanced during the month of October.

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 September, but lagged a bit to the broader Utilities benchmark, which seems to have been helped by greater exposure to the more cyclical renewable power generation companies. Outside of the volatility witnessed in April, the year 2025 has been a very positive one for Utilities stocks. Some of the more important factors, both pushing and pulling on Utilities in September included:

• • Risk-on trading and demand for high growth mega-caps over defensive sectors
  • Longer term yields falling, reflecting some weaker sentiment in economic data, along with the first rate cut from the Federal Reserve since Dec 2024
  • 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.

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

Harvest Global REIT Leaders Income ETF

HGR was flat during the month, lagging the overall performance of the REITs sub-sector. Sector continued to be a bit of a mixed bag in September, with some of the more value-oriented areas, like Office, Health Care and Retail Malls gaining, while areas like Towers and Industrials (typically more growth-like) lagged.  A bright spot remained in Data Center REITs, which continued to ride the AI/data center growth story.

HGR remains broadly diversified across global REIT subsectors, offering exposure to growth-oriented assets and value plays like office and healthcare REITs. This approach helps manage macro uncertainty while targeting consistent income from global real estate leaders.

Outlook | Global REITs face headwinds from rate concerns and macro uncertainty | 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 slightly positive for September. This was led by the Refining & Marketing and the Energy Storage & Transport sub-segments, while Oil & Gas Producers and Equipment & Services sold off on the higher Beta to crude oil prices. Overall, the energy sector performance diverged from crude oil price, which traded lower over the month. Two notable catalysts that weighed on crude prices were:

• • Speculation that OPEC+ would continue to seek market share and return more production to the market; and
  • The US looking for ways to end the war in Ukraine and Gaza.

HPF continues to balance exposure to large-cap energy names with a covered call strategy to generate income. The ETF will be rebalanced and reconstituted in October.

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 shares were flat during September following several months of strong returns. This reflected continued strength in mega-cap diversified banks which was offset by a pullback in regional banks, as investors digested the resumption of interest rate cuts by the U.S. Federal Reserve.

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.

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

• • The areas of outperformance were numerous, with Financials, Energy, Consumer stocks and Materials all leading the way higher
  • The defensive areas of the ETF like Utilities, Telecoms and REITs lagged the upside, but still broadly saw gains on the month

Harvest Travel & Leisure Income ETF

TRVL struggled in the month of September, posting a disappointing decline for the month, even as broad stock markets gained:

• • Downside led by airlines, cruise lines and hotels
  • While the consumer has been resilient, economic data has been a little mixed recently, and the looming US government shutdown, along with talk of mass layoffs has weighed on travel sentiment
  • Long-term travel demand remains supported by demographic trends despite potential economic headwinds.

TRVL offers diversified exposure to top travel stocks. The ETF was reconstituted in September with one name change. SkyWest Inc replaced Choice Hotels.

Outlook | While some short-term pressure from consumer is cautionary and government shutdown injects uncertainty; 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 Industrial Leaders Income ETF

HIND posted a positive return in September, as industrial stocks generally extended their rebound from the April lows, as Aerospace and Defense stocks rallied on the back increased geopolitical tensions while perceived beneficiaries within the sector of AI datacenter spending also continued to rally.

Key drivers for the month included:

• • Defense companies Lockheed Martin and RTX along with commercial aerospace exposed companies GE Aerospace and Textron
  • Caterpillar shares advanced as investor expectations grew for increased demand for electric generators to supplement power demand from AI datacenters
  • The ETF was rebalanced during September. A position in electric power system provider GE Vernova was added, while the ETF’s position in salvage auto auction provider Copart was eliminated

HIND maintains its covered call strategy for added income while staying positioned to benefit from renewed industrial sector momentum. 

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 September as Canadian markets continued to break fresh highs, with 5 straight positive months. Top contributors to ETFs’ outcome included Agnico Eagle Mines, as Gold continued to rally in the month, as well as TD Bank, and TC Energy.

HVOI rebalanced in September, removing Manulife Corp, capturing profits as its risk profile has elevated somewhat, and adding RB Global, a multi-year, strong compounder with a strong competitive positioning in Industrial vehicles and assets. 

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 | Strategies 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 moved higher on the month, with HPYT outperforming, capturing the higher duration effects of longer bonds. It has been a volatile and difficult path for long bonds though. For September, the ETFs were impacted by:

• • The Federal Reserve cut overnight rates for the first time in 2025 – Front end of the yield curve initially did move down slightly, reflecting near-term expectations for additional rate cuts to come, helping to continue the positive moves we have witnessed in HPYM
  • Note, Fed members did not agree with newly installed Stephen Miran that they should have been aggressively cut, as he was the only dissenter to 25 bps
  • Long end yields declined in line with the curve and remained at the lower level (~4.70% on the 30 year), as traders breathed some sigh of relief that perhaps Federal Reserve independence might not be under imminent attack by political interests

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 positive returns in September, riding the tailwinds of strong equity markets, which were buoyed by central rate bank cuts, as well as continued improvement in sentiment. Gains were led by strong performances from HTA (Harvest Tech Acheivers Growth & Income ETF), as well as HBF (Harvest Brand Leaders Plus Income ETF).   TRVI (Harvest Travel & Leisure Income ETF) was a negative detractor over the month, in what was otherwise a constructive month for portfolio holdings.

The ETFs made no significant changes over the month.

Outlook | HRIF and HDIF remain defensively positioned with multi-sector exposure and high-income strategies to moderate risk | 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, and modest positive performance in fixed income exposures as well. Top equity contributors included HTA (Harvest Tech Acheivers Growth & Income ETF), as well as HBF (Harvest Brand Leaders Plus Income ETF).   Harvest Premium Yield Treasury ETF was a positive contributor in fixed income.

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 saw eye-popping returns of almost 25% on the month, an incredible breakout to the upside, vastly outperforming the commodity, which also broke to new all-time highs. The Fed’s independence is being called into question with Trump’s attempts to impose political pressure on policy and insert his own favourable candidates onto the Board. Couple this with concerns about increased spending and calls against unsustainable debt levels, leading Long Bond traders to demand higher rates on bonds. Gold is appealing as a safe-haven asset, but also amidst sticky inflation and rising deficits.

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.

Outlook | Concerns around Fed Independence have increased substantially | 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

TRVL struggled in the month of September, posting a disappointing decline in the month, even as broad stock markets gained:

• • Downside led by airlines, cruise lines and hotels
  • While the consumer has been resilient, economic data has been a little mixed recently, and the looming US government shutdown, along with talk of mass layoffs has weighed on travel sentiment
  • Long-term travel demand remains supported by demographic trends despite potential economic headwinds.

TRVL offers diversified exposure to top travel stocks. The ETF was reconstituted in September, with one name change. SkyWest Inc replaced Choice Hotels.

Outlook | While some short-term pressure from consumer is cautionary and government shutdown injects uncertainty; 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 seems to be turning a corner in 2025, and September saw some very aggressive gains:

• • The gain of many clean energy stocks has been apparent this year and has returned to following very closely with the higher momentum, growth trade that has been apparent in broader stock markets.
  • Names like EOS Energy and Plug Power on the Battery/Energy Storage side and names like Plug Power and ThyssenKrupp Nucera on the Fuel Cell side performed quite strongly in September
  • 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 September as Canadian markets continued to break fresh highs, with 5 straight positive months. Top contributors to the ETFs’ outcome included Agnico Eagle Mines, as Gold continued to rally in the month, as well as TD Bank, and TC Energy.

HVOL rebalanced in September, removing Manulife Corp, capturing profits as its risk profile has elevated somewhat, and adding RB Global, a multi-year strong compounder with a strong competitive positioning in Industrial vehicles and assets.  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 | Strategies 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

September saw accelerated gains in blockchain equities, a significant reversal of August’s volatility, driven by sustained progress in enterprise integration, increased output by crypto miners, and the growth of decentralized infrastructure. The environment favored companies capable of leveraging their data center assets for broader applications.

Market Drivers & Holdings Analysis

Crypto Miners surged in September, driven by the deepening AI/High Performance Computing pivot. For example, IREN’s stock jumped ~77% MoM as investors rewarded large-scale GPU acquisitions and new high-performance computing contracts, overshadowing the tighter margins in core Bitcoin mining.

Outlook | Despite macro rate uncertainty, the long-term fundamental drivers remain solid, anchored by the rapid institutional adoption of tokenization, the maturation of Web3 technologies, and the massive capital allocation toward AI infrastructure, as demonstrated by the strategic moves of core holding Oracle. HBLK provides diversified exposure to these secular growth trends.

Harvest Bitcoin Leaders Enhanced Income ETF

September saw accelerated gains in crypto assets, a significant reversal of August’s volatility, driven by sustained progress in enterprise integration, increased output by crypto miners, and the growth of decentralized infrastructure. The environment favored companies capable of leveraging their data center assets for broader applications.

Key Highlights:

Cipher stock surged ~80% after announcing a multi-billion dollar, 10-year AI hosting deal with Fluid stack, backed by Google. This transformed Cipher from a Bitcoin miner into a key AI data center developer, leading to multiple analyst upgrades and securing a long-term, high-margin revenue stream.

Outlook | The outlook for HBTE remains constructive. The ETF’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 ETF’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 IBIT iShares Bitcoin Trust ETF. Bitcoin The rally was driven in-part by the US Federal Reserve’s interest rate cut, which weakened the dollar and boosted risk-on assets. This, combined with sustained institutional inflows via Spot Bitcoin ETFs, signaled strong fundamental demand and propelled the price higher.

Harvest Diversified High Income Shares ETF

HHIS performed well in September on a net asset value (NAV) per unit basis, as the higher-growth technology stocks bucked the trend of historically weaker September market returns.

Positive contributors for HHIS included TSLY (invests in Tesla), PLTE (invests in Palantir), and GOGY (invests in Alphabet Inc.). Tesla continued its price surge, driven by optimism of Elon Musk’s re-engagement to the company, as well as positive delivery trends. The main detractor for period was AMHE (invests in Amazon).

Option premiums were well supported. The income generation through covered calls writing remained around a 33% write-level across the suite. There were no significant changes to the ETF composition during the month.

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

Harvest Canadian High Income Shares ETF

HHIC has completed its first month of trading and benefited from the tailwinds of strong equity markets, which were buoyed by the central bank’s rate cuts, as well as continued improvement in sentiment.

Positive contributors for HHIC in September came from the strong performances of Agnico Eagle, Cameco, and Toronto Dominion Bank. Commodity prices (Gold up 12%, Uranium up 11%) drove the performance of Agnico Eagle and Cameco. There were only 2 detracting positions, in the relatively more defensive telecom sector: BCE Inc. and TELUS.

The 10 Harvest single stock ETFs based on the holdings in HHIC also benefited from strong equity market tailwinds. The ETFs that benefitted the most were CCOE, AEME and TDHE.  Of the ETFs in the Canadian single stock lineup, only TEHE and BCCE were down for the month.

Option premiums were well supported. Income generation through covered calls writing remained at around 33% write-level across. There were no significant changes to HHIC composition during the month.

Outlook | HHIC continues to offer diversified, enhanced income exposure to a portfolio of notable Canadian equities. The Harvest single stock ETFs based on the stock names in HHIC offer a more concentrated exposure and are designed to provide high monthly income.

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.