By James Learmonth
Geopolitical and trade policy uncertainty remain elevated, yet the technology sector continues to demonstrate resilience. While market volatility is inevitable, innovation and strong fundamentals have historically driven long-term growth in the sector. Even with the potential impact of tariffs, companies are adapting through diversification and strategic investments. As trade negotiations evolve, opportunities may emerge that reinforce the sector’s ability to thrive in a dynamic global landscape.
Taking it back to basics
During periods of uncertainty, the best course of action for investors is often to return to basics.
The technology sector remains exposed to several themes that, although they may be subject to shorter term disruptions, are likely to see continued growth in investment over the longer term.
Artificial intelligence (AI) is still at the top of the list. In a recent piece, we’d discussed how investors could play the AI race following the rise of China’s DeepSeek. Upon release, DeepSeek claimed that it used far less energy compared to its US competitors. However, new data cast doubt on those claims. Concerns may remain over the rate of growth in investment in generative AI. However, the race to develop more powerful models and new applications continues. That supports both software and hardware industries.
Cybersecurity is another key area of investment going forward. There is continued growth in network access points, sustained growth in cyberthreats, and a tense geopolitical environment that act as positive drivers. A previous report from McKinsey & Co stated that cyberattacks cause trillions of dollars in damage every year. Organizations public and private spent around $150 billion in 2021 on cybersecurity, and that investment has only grown into the middle of this decade. Gartner forecast that global security and risk management spending would total $215 billion in 2024 – up 14.3% from 2023.
Electrification – or the growth in electric vehicles (EVs), and increased use of industrial automation are also driving growth in semiconductor usage that go beyond the ultra-high-performance processors used in artificial intelligence.
Where is tech headed?
In the near-to-medium term, consensus earnings estimates suggest a slowing in earnings per share (EPS) growth over the next 12 months for the largest names. Those tech giants have been key drivers for the sector over the past couple of years. Contrarily, the rest of the tech sector on average is expected to see a reacceleration in earnings growth. That follows several quarters of slow or negative growth for the small-to-medium names in this space. This trend may lead to a reversal in the outperformance of market capitalization weighted indexes relative to their equal weighted counterparts.
Tech ETFs to watch as volatility rises
The Harvest Tech Achievers Growth & Income ETF (HTA:TSX) is an equally weighted portfolio of 20 technology leaders. That includes giants in the AI and semiconductor space like NVIDIA and Broadcom and cybersecurity leaders like Palo Alto Networks. HTA overlays its portfolio with an active covered call writing strategy, designed to generate high monthly cash distributions for unitholders. It last paid out a monthly cash distribution of $0.14 per unit. Moreover, HTA has increased its monthly distribution five times since its inception.
Annual Performance
As at February 28, 2025
| Ticker | 1M | 3M | 6M | YTD | 1Y | 2Y | 3Y | 4Y | 5Y | 7Y | 8Y | SI |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| HTA | (3.91) | (4.03) | 2.09 | (2.26) | 9.69 | 29.89 | 12.99 | 14.70 | 19.28 | 16.26 | 17.84 | 15.27 |
| HTA.B | (4.17) | (0.36) | 10.34 | (1.32) | 18.22 | 34.95 | 19.37 | 19.48 | - | - | - | 22.63 |
| HTA.U | (3.73) | (3.57) | 2.78 | (1.96) | 10.90 | 31.06 | 14.23 | 15.71 | 20.72 | 17.54 | - | 18.57 |
For investors who are looking for even higher levels of income and growth potential, there is the Harvest Tech Achievers Enhanced Income ETF (HTAE:TSX). This ETF applies modest leverage of approximately 25% to an investment in HTA. It offers access to the same portfolio of large-cap tech companies with enhanced monthly cashflow. HTAE last delivered a monthly cash distribution of $0.16 per unit.
Annual Performance
As at February 28, 2025
Disclaimer:
Commissions, management fees and expenses all may be associated with investing in Harvest ETFs managed by Harvest Portfolios Group Inc. (the “Funds” or a “Fund”). Please read the relevant prospectus before investing. The Funds’ returns are not guaranteed, their values change frequently, and past performance may not be repeated. The content of the article is to inform and educate. Tax investment and all other decisions should be made with guidance from a qualified professional. The indicated rates of return are the historical annual compounded total returns (except for figures of one year or less, which are simple total returns) including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns.
