Harvest ETFs Monthly Insights (January 2023 Summary)
Harvest ETFs
Consistent monthly income and growth-focused investment solutions designed for Canadian investors.
Macro Snapshot – Is Less Bad The Start of the New Good?
January gave markets a reprieve after December’s difficulties. Investors found reason for positivity in the clearer picture of peaking inflation and better than expected corporate earnings. We continued to see supply chains unstick and inflationary pressures abate, perhaps improving the likelihood that rate hikes will slow, stop, or even reverse relatively soon. The shadow of January earnings season also proved to be less worrying than expected, with many companies beating the somewhat low expectations that had been set for them in Q4.
All that combined to an over 6% return on the month for the S&P 500 Index, with a greater portion of that occurring in more ‘risk on’ sectors like tech which had been oversold by December. Of note is the fact that the equally weighted S&P 500 was up even more, perhaps indicating that the breadth of participation on the recovery has been relatively strong.?
Similarly, we would note that with doom and gloom in the daily media narrative, there are areas within consumer-focused areas that continue to perform relatively very strongly. Specifically, travel related stocks held in the Harvest Travel & Leisure Index ETF (TRVL), have generally held up significantly better than many consumer discretionary stocks, and were over double the rebound of the market in January.
We continue to believe that because the breadth of future expectations amongst analysts remains extremely wide, that the shorter-term volatility will remain elevated. Many expect a downturn, others expect that there has been a full-on restart of the bull market. We believe that capturing upside while remaining prepared for any uncertainty in the timing of the recovery, is a prudent approach.
It's worthwhile to say that one month does not make a trend. January’s rebounds were relatively spikey – pointing to potential volatility towards the upside. As well, much of the “good” news we saw in January could be better described as just “less bad” relative to last year’s newsflow. Markets remain structurally more volatile than they were before the pandemic and our optimism is tempered with realism in this environment.
Given that outlook, covered call options ’ capacity to monetize volatility and ensure ‘bird in the hand’ cashflow in almost any market conditions remain highly attractive in our view.
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Harvest ETFs?Interactive Booklet Update?(as at January 31, 2023)
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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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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.
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