Harvest ETFs Monthly Insights (February 2024 Summary)
Harvest ETFs
Consistent monthly income and growth-focused investment solutions designed for Canadian investors.
Macro Snapshot: Strong Earnings Fuel A Late Winter Rally
Maybe investors didn’t see their shadows on Groundhog Day. While we do not yet know if we will have a full-blown spring rally, we have seen some positive movements. Those moves were largely driven by a broad and diversified economic dataset that indicates the US economy will probably avoid a recession — the so-called ‘soft landing’ scenario. Those data, combined with an earnings season that broadly met or exceeded expectations, resulted in the S&P 500 index rising by just over 5 percent in February.
The optimism some investors are now feeling seems well-founded. Despite a slowing US economy, 85 indicators tracked on the Chicago Fed activity index mirror past instances where the US economy arrived at a soft landing. That is not a guarantee that the US economy won’t fall into a recession, but investors are clearly pricing in a higher likelihood of that soft landing.
Harvest ETFs Interactive Booklet Update (as at February 29, 2024)
As the consensus has shifted towards a soft landing the outlook for interest rate cuts in the US has been pushed out slightly. But the broad sense that America’s economy is not headed towards recession has contributed to more positive sentiment.
Earnings season helped improve investor sentiment as well. While there have been outliers, most major corporations met or exceeded expectations. While we have seen some impacts of the overall slowdown in economic activity, we have seen profit margins generally remain resilient. We expect that economic activity in the US will pick up from its low ebbs, even if those ebbs don’t cross into recession territory.
Certain sectors have been riskier than others. Some names in the financial sector have struggled with slowing loan growth and higher costs. Real estate subsectors have had to reckon with higher debt servicing costs. Both sectors would likely benefit from a soft landing scenario. However, the market rally has been broad-based. While large-cap tech and other tech-like companies lead the way, more sectors, subsectors, and names have participated in this growth period.
We remain optimistic about the US market, given the underlying strength of its economy. While we are always on the lookout for a catalyst that could crush this still-nascent rally, we do not yet see one. The green shoots of spring may have already risen for investors this past February.
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Please see the table of cash distributions for our equity-income and enhanced equity income ETFs for the month ended February 29, 2024. Click here to view the full press release.
ABOUT HARVEST ETFS:
Founded in 2009, Harvest Portfolios Group Inc. is an independent Canadian Investment Fund Manager. At Harvest, our guiding principles are premised on building wealth for our clients through ownership of strong businesses that have the potential to grow & generate income over the long term. Harvest has an established track record with its stable of equity ETFs. Now, in 2024, Harvest has expanded its income philosophy to introduce Fixed Income ETFs to our innovative lineup. Harvest now offers exposure to the highest-rated bonds like US Treasuries, coupled with its covered call strategy that provides high yields to increase monthly income. Read More
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For information purposes only and does not constitute an offer to sell or a solicitation to buy the securities referred to herein or used to engage in personal investment strategies. Please consult your investment advisor.
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature and depend upon or refer to future events or conditions. 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. 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.
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 including changes in unit value and reinvestment of all distributions and do not take into account income taxes payable by any security holder that would have reduced returns. The funds are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made with guidance from a qualified professional.