By Ambrose O’Callaghan & Paul MacDonald, CFA
Harvest ETFs launched two Harvest Premium Yield ETFs, a new ETF lineup from one of Canada’s largest option writing firms, on January 21st, 2026. Harvest Premium Yield ETFs will provide access to a portfolio of big six Canadian banks and dominant and industry-leading U.S. equities, respectively. Notably, these will also be the very first Harvest ETFs that pay two monthly distributions to unitholders.
What is the difference between traditional yield and premium yield?
Harvest ETFs’ first introduced Equity Income ETFs like the Harvest Healthcare Leaders Income ETF (TSX: HHL) and the Harvest Tech Achievers Growth & Income ETF (TSX: HTA) in the previous decade. These portfolios focused on sectors, like healthcare or technology, and overlayed those portfolios with an active covered call option writing strategy.
This enabled these ETFs to generate consistent monthly income. HHL, the largest healthcare ETF in Canada and HTA have both delivered 10+ years of consistent monthly distributions. In reference to the Harvest lineup, this is what we may categorize as a “traditional yield”.
Harvest Premium Yield ETFs – the Harvest Premium Yield Canadian Bank ETF (TSX: HPYB) and the Harvest Premium Yield Enhanced ETF (TSX: HPYE), utilize puts and covered calls to generate twice monthly cash distributions. HPYB and HPYE also employ moderate leverage to enhance yield and produce high income that is paid twice monthly to unitholders.
Why did Harvest ETFs launch the new Premium Yield ETF suite?
Harvest ETFs sought to provide Canadians access to a portfolio of big six Canadian banks for those seeking both long-term capital appreciation from the country’s largest financial institutions, while also paying twice monthly cash distributions from written puts, covered calls, and moderate leverage.
Meanwhile, HPYE allows Canadian investors access to a core U.S. equity portfolio. The Premium Yield overlay, which utilizes puts, covered calls, and moderate leverage, means that HPYE can generate high levels of income that is paid out twice per month.
What was the core investment thesis behind focusing on the big six Canadian banks with HPYB?
Canada’s highly regulated and concentrated banking system means that these institutions can benefit from a stable domestic market share, steady profitability, and strong capital buffers. This has helped Canada’s big six banks effectively navigate various economic cycles. Going forward, their scale and diversification across retail banking, wealth management, capital markets, and insurance – both in Canada and in some parts of the world – can support steady earnings. Canada’s big six banks have a long track record of paying and growing dividends.
That combination of long-term capital appreciation and income generation make Canada’s big six banks an ideal pairing with Harvest’s trusted option writing strategy. The Harvest Premium Yield Canadian Bank ETF (TSX: HPYB)holds a portfolio of the big six Canadian banks, utilizes puts and covered calls in a moderately levered portfolio to generate twice monthly cash distributions.
There are already a lot of covered call bank ETFs, how do covered calls compare to puts in Canadian banks?
There are a lot of covered call bank ETFs and very few that focus on the put options. This has created a unique opportunity to maintain some of the growth upside while paying twice monthly and having lower downside volatility risks.
What makes the HPYE portfolio an effective way to capture broad equity exposure?
The Harvest Premium Yield Enhanced ETF (TSX: HPYE) provides investors access to a portfolio of dominant and industry-leading U.S. equities. These include gigantic brands like Apple and McDonalds, tech titans like NVIDIA and Amazon, energy, manufacturing, and utilities leaders like Exxon Mobil, Caterpillar, and General Electric, and more.
Investors get access to this portfolio of core U.S. equities, with twice monthly cash distributions from dynamic puts and covered calls, as well as moderate leverage.
How do put options provide downside protection?
To be clear there are two ways that put options protect on the downside. The first is buying put options that outright protect against pullbacks. The other is by writing put options. Much like a covered call option, where writing say 5% out of the money means there is still the participation on the full upside to that 5%, by writing put options 5% out of the money – the downside on the first 5% would be missed. By writing put options some of the downside on the written portion is missed. This helps reduce the downside while still generating the income.
These are the first Harvest ETFs to pay twice-monthly income. How do the twice-monthly cash distributions comprise a key differentiator for both HPYB and HPYE?
The evolution of the industry has made it clear: Canadians want income. At Harvest ETFs, it comes as a natural evolution that we now offer two ETFs that deliver our first-ever twice monthly pay period.
What types of investors are these strategies for?
Harvest Premium Yield ETFs can be used by many investors:
Retail (DIY) investors looking to access portfolios of core U.S. and Canadian companies enhanced by a professionally managed options strategy and moderate leverage, without the complexity of using margin, futures, or options directly.
Advisors and wealth managers seeking to efficiently deliver a sophisticated, high distribution -yield strategy that combines dynamic put and call writing with core North American equity exposure in a streamlined solution.
Passive income investors, looking for high monthly income that paid twice per month while maintaining exposure to established Canadian and U.S. businesses.
Diversification-focused investors wanting a single portfolio that provides diversified exposure to leading companies, consistent monthly income paid twice monthly, and long-term growth potential without the need to manage multiple holdings or ongoing rebalancing.
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”). Please read the relevant prospectus before investing. The Funds are not guaranteed, their values change frequently, and past performance may not be repeated. Distributions are paid to you in cash unless you request, pursuant to your participation in a distribution reinvestment plan, that they be reinvested into available Class units of the Fund you own. If a Fund earns less than the amounts distributed, the difference is a return of capital.
The Funds are categorized as a liquid alternative ETF. This means they have the ability to use leverage and can invest more than 10% of their assets in a single issuer. The Funds employ moderate leverage which can amplify both gains and losses.
Certain statements included in this communication constitute forward-looking statements (“FLS”), including, but not limited to, those identified by the expressions “expect”, “intend”, “will” and similar expressions to the extent they relate to the Fund. The FLS are not historical facts but reflect Harvest’s, the Manager of the Fund, current expectations regarding future results or events. These FLS statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although Harvest, the Manager of the Fund, believes that the assumptions inherent in the FLS are reasonable, FLS are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. Harvest, the Manager of the Fund, undertakes no obligation to update publicly or otherwise revise any FLS or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.
