Harvest ETFs Monthly Insights (June 2024 Summary)
Harvest ETFs
Consistent monthly income and growth-focused investment solutions designed for Canadian investors.
Macro Snapshot: Tech Brings the Summer Heat for Markets
The S&P 500 has returned 3.59% for June. Historically, June has been a very busy month for the stock market. Over the past 10 years, June along with July, and August have all had positive returns on average. This has been especially true for July, so there may be more to come. In nine out of the past ten years, July has delivered strong positive returns.
Year to date, technology has powered the broader market and that remained the case for the month of June. However, we are starting to see, more sectors participate in growth as the economy continues to improve, giving the market some improvement in breadth. ?That said, returns have remained narrow in the current environment.
With technology being the star sector it is and has been, it is worth highlighting our investment solution that covers the space. The Harvest Tech Achievers Growth & Income ETF (HTA: TSX), which offers access to an equal-weight portfolio of large-cap tech stocks, has delivered strong performance in the year-to-date period. HTA among other core Harvest equity income ETFs will increase their distribution amounts effective July. HTA will offer a monthly cash distribution of $0.1300 per unit payable on August 9, 2024.
As for as the narrative is on interest rates, we appear to be transitioning from a tightening to an easing interest rate cycle. The BOC has already cut its rate by 25 basis points. However, the timing of further rate cuts is still to be determined and the US Fed is yet to start. This suggests that those in the market will remain sensitive to economic data points in either direction including economic data points that are typically ignored.
In the early part of June, US employment data and other indicators released showed sign of a softening economy. On the contrary, the second week of June saw strong data on non-farm payroll and we saw the longer end bond yields moved up significantly in a short period, but the month-over-month bond yields dropped.
One of our investment solutions that’s more sensitive to what’s happening with bond yields on long end the yield curve is the Harvest Premium Yield Treasury ETF (HPYT: TSX). It is a portfolio of ETFs which hold longer dated US Treasury bonds, employing up to 100% covered call writing. It has paid out a monthly cash distribution of $0.1500 per unit every month since its inception in September 2023. It’s built for investors who are looking for high income from bonds while enjoying the saftest of being exposed to US treasury bonds.
Moving to what’s working right now. Obviously, tech continues to be very strong. In addition, momentum is really the leading factor in the market right now. It is not just within the concentrated tech, but also in other markets, as well as pockets within subsectors.
Healthcare is a great example where we saw great data on Eli Lilly, not just in obesity with their sleep apnea results, but also in areas like Alzheimer’s.
The investment solution we offer in the space, the Harvest Healthcare Leaders Income ETF (HHL: TSX), owns Eli Lily along with other innovative leaders of this vital sector. HHL has delivered more than $450 million in total monthly distributions since its inception. It too is among the Harvest ETFs that will increase distribution effective July.
The US Banks are working too. When we look back just over the past month, there has been some volatility. But if we extend that out to year-to-date, U.S. banks are performing very well compared to their Canadian counterparts. This is partially owned to economic differences.
The investment solution we offer in this space is the Harvest US Bank Leaders Income ETF (HUBL: TSX). It offers access to leaders in the US banking space. HUBL has climbed 10.99% in the year-to-date period as at May 31, 2024. This also another of out core equity income ETFs to increase its distribution effective July. Its monthly cash distribution will increase to $0.0900 per unit, representing an 8% increase in its distribution per unit.
Artificial intelligence continues to be a huge story. However, this has branched beyond its impact in the tech space. Indeed, areas like infrastructure build out and new manufacturing facilities. These will require more advanced equipment as power demand has shot up. Indeed, ChatGPT utilizes six to ten times more power than a Google search.
Only one of our funds was rebalanced in June. July will be a big month with us preparing for several of our core funds to be rebalanced and reconstituted.
There continues to be volatility within the interest rate environment. This is an environment wherein volatility has been elevated in specific pockets. That allows us to be more active in our option strategy. Of course, this has also allowed us to participate a little bit more in select positions in recoveries as they have bounced off their lows.
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Please see the table of cash distributions for our equity-income and enhanced equity-income ETFs for the month ended June 30, 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 and Fixed Income ETFs. Now, in 2024, Harvest has expanded its income philosophy to introduce Balanced Income ETFs to our innovative lineup. These portfolios are invested in ETFs listed on a recognized North American stock exchange that provide exposure towards large capitalization equity securities, investment grade bonds or money market instruments issued by corporations or governments and will include ETFs that engage in covered call strategies. Read More
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DISCLAIMER:
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 (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. Tax, investment and all other decisions should be made with guidance from a qualified professional.