Harvest ETFs Monthly Insights (February 2023 Summary)
Harvest ETFs
Consistent monthly income and growth-focused investment solutions designed for Canadian investors.
Macro Snapshot –?It’s a new year, not a new era…yet
After six weeks of buoyant performance across broad markets and sold-off sectors, the back half of February served us all a stark reminder: volatility persists. Hotter-than-expected inflation numbers, incongruence in the labour market, and fears of further Fed hawkishness brought volatility back and prompted broad-based weakness on equity markets. Earnings season is largely behind us, and while most of the market beat expectations, we should note that those expectations were set quite low, and the ‘beat’ was among the lowest we’ve seen since the Great Financial Crisis.?
All this reminds us that while the calendar has turned over, we are not suddenly in a new market era.?
Markets are still in the midst of an economic cycle. While leading indicators about inflation peaking or plateauing prompted some positivity, we lack concrete data which could confirm entry into a new phase of the cycle. With big geopolitical uncertainty in the backdrop, and plenty of unknowns on the horizon, markets are calling out “ground control to Major Tom” and what little data they do receive sends them floating in a most peculiar way.
Our outlook remains consistent in the face of cloudy equity markets. We remain focused on large-cap leading businesses, which can weather uncertain times and show strong visibility into earnings. Tactical tweaks and short-term strategies can’t compete with the confidence that comes from owning great businesses. Monetizing volatility with active covered call options remains a highly effective way to generate returns in a spikey market.??
While defensive asset classes have generally been holding up relatively well in the down market, there is one key bright spot focused on consumer growth that is atypical for this type of environment.?This has been the Travel & Leisure sector, captured by the Harvest Travel & Leisure Index ETF (TRVL). Strong pent-up demand following the pandemic, and the resumption of demographically powered structural growth trends have turned the sector into a market-beater so far in 2023.?
Overall, we still see bulls and bears fighting on the markets, with volatility positioned right at the pivot-point. When markets go spikey, we remain true to our approach: own quality, and monetize volatility with active covered calls.?
Harvest ETFs?Interactive Booklet Update?(as at February 28, 2023)
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ABOUT HARVEST ETFS:
Founded in 2009, Harvest is an independent Canadian Investment Fund Manager managing $3.2?billion in assets for Canadian Investors. Harvest offers an innovative suite of exchange traded funds, mutual funds and publicly-listed structured fund products designed to satisfy the long-term growth and income needs of investors. We pride ourselves in creating trusted investment solutions that meet the expectations of our investors.?Read More?
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