This Highly Diversified ETF Generates Enhanced Monthly Income


November 8, 2023


November 8, 2023


November 8, 2023

By Harvest ETFs

Canadian investors have been forced to reorient their investment strategy in this new decade. In the 2010s, red-hot markets were fueled by historically low interest rates and multiple rounds of quantitative easing. This contributed to one of the longest bull markets on record. That streak spilled into the early 2020s, despite a global health scare, as central banks pursued even more radical forms of monetary stimulus. Then, in late 2021 and early 2022, inflation surged to levels not seen in decades. Central banks made a hawkish turn that saw interest rates rise to early-2000s levels.

The shift has spurred many investors to take a different approach. Gone are the days that a blue-chip bank stock will be guaranteed to deliver solid capital appreciation year in and year out. While the market may have changed compared to the 2010s, the principles that govern sound investing have not. Harvest ETFs focuses on wealth creation by investing in strong, growth-oriented businesses. It utilizes a covered call strategy for income generation.

Investors have shifted from a focus on capital appreciation to one that values capital preservation. In these conditions, the Harvest Diversified Monthly Income ETF (HDIF:TSX) offers a portfolio primarily of Harvest equity income ETFs that are positioned to deliver steady monthly income and the opportunity to participate in growth potential.

The seven components of the HDIF ETF

To participate in the long-term innovations and developments in healthcare and technology, the HDIF ETF provides investors with exposure to the Harvest Canadian Healthcare Leaders Income ETF (HHL:TSX) and the Harvest Tech Achievers Growth & Income ETF (HTA:TSX). The HHL ETF has delivered an annualized return of 5.8% at October 31, 2023 since its inception on December 18, 2014. Meanwhile, the HTA ETF is an award-winning ETF that has delivered an annualized return of 13% as at October 31, 2023 since its inception on May 26, 2015.

Further more, the HDIF ETF also offers exposure to sectors that offer protection in specific economic and market conditions. For example, the Harvest Equal Weight Global Utilities Income ETF (HUTL:TSX) invests in an equally weighted portfolio of 30 global utilities companies, covering utilities, telecommunications, oil & gas storage, and transportation. This ETF has delivered a stable annualized return of 2% as at October 31, 2023 since its inception on January 15, 2019. The Harvest US Bank Leaders Income ETF (HUBL:TSX), on the other hand, is set to thrive in more robust economic conditions. It is a core US financials portfolio focused on the dominant bank and financial companies in the US.

The Harvest Brands Leaders Income ETF (HBF:TSX) offers exposure to a portfolio of 20 large companies selected from the world’s top 100 brands. Shares of this ETF have delivered an annualized return of 6.8% at October 31, 2023 since its inception on July 24, 2014. The sixth ETF in HDIF is the Harvest Canadian Equity Income Leaders ETF (HLIF:TSX), which seeks to provide its unitholders with monthly cash distributions; capital appreciation, and lower overall volatility of portfolio returns than would otherwise be experienced by owning equity securities of the issuers directly.

There have been two new additions to HDIF in 2023. First was the Harvest Travel & Leisure Income ETF (TRVI:TSX) . This ETF offers exposure to 30 dominant, large-cap Travel & Leisure companies listed in North America.

The second is the Harvest Premium Yield Treasury ETF (HPYT:TSX), which currently accounts for less than 5% of the fund . This is the first Fixed Income ETF launched by Harvest ETFs. HPYT is a portfolio of ETFs which holds longer dated US Treasury bonds that are secured by the full faith and credit of the US government, employing up to 100% covered call writing to generate a higher yield and maximize monthly cash flow.

The HDIF ETF offers a one stop diversified core monthly income solution. Investors get the value of the best businesses in North America and the reliability that comes with them. HDIF is reconstituted and rebalanced at minimum quarterly, so the components within are subject to change.

How the HDIF ETF delivers strong monthly income

While HDIF’s underlying ETF portfolios all hold equities with distinct exposures to market forces, there is another important strategy at work in each of them: equity income derived from covered call strategies.

Each of the approximately equally weighted ETFs held in HDIF employ an active covered call strategy to generate a monthly cash distribution to unitholders. Covered calls work by writing call options on a percentage of the funds’ holdings to generate a premium. You can learn more about covered call options here. When actively managed, covered call strategies are actually able to monetize market volatility, by taking advantage of higher option premium prices due to implied volatility.

HDIF combines separate equity strategies that are all combined with an active call option strategy. This, with the addition of 25% leverage, means the ETF generates an attractive annualized yield that—in a market when both equities and fixed income have struggled—can be an important component of total return.


Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). Please read the relevant prospectus before investing. 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. The funds are not guaranteed, their values change frequently, and past performance may not be repeated.


For Information Purposes Only. All comments, opinions and views expressed are of a general nature and should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies.

You will usually pay brokerage fees to your dealer if you purchase or sell units of the Fund(s) on the TSX. If the units are purchased or sold on the TSX, investors may pay more than the current net asset value when buying units of the Fund(s) and may receive less than the current net asset value when selling them. There are ongoing fees and expenses associated with owning units of an investment fund. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated. An investment fund must prepare disclosure documents that contain key information about the fund. You can find more detailed information about the fund in these documents.

Certain statements in the Harvest Blog 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.

FLS are not guarantees of future performance and are by their nature based on numerous assumptions, which include, amongst other things, that (i) the Fund can attract and maintain investors and have sufficient capital under management to effect their investment strategies, (ii) the investment strategies will produce the results intended by the portfolio managers, and (iii) the markets will react and perform in a manner consistent with the investment strategies. Although the FLS contained herein are based upon what the portfolio manager believe 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 as a result of new information, future events or otherwise.