Harvest Portfolios has introduced a suite of five ‘Enhanced Equity Income’ ETFs on the Toronto Stock Exchange.

Michael Kovacs, President and CEO of Harvest Portfolios.

Each of the new ETFs offers lightly leveraged exposure to one of the firm’s existing ‘Equity Income’ ETFs, delivering 125% of the daily return of its target fund.

Each underlying Equity Income ETF provides exposure to a portfolio of dividend-paying equities while utilizing an actively managed options overlay that seeks to further boost the ETF’s income profile. The options sleeve consists of covered calls on up to 33% of the value of the ETF’s assets.

Covered call strategies involve holding a long position in an asset and selling or “writing” call options on that same asset in an attempt to generate more income (the additional income from option premium) than the asset would otherwise provide on its own from dividends or other distributions.

According to Harvest, the light leverage of the Enhanced Equity Income ETFs serves to boost the annualized yield from the underlying Equity Income ETF while raising both the risk-return profile and the market growth prospects. Distributions will be made to investors on a monthly basis.

Each Enhanced Equity Income ETF charges zero direct management fees, although investors will need to pay the management fees applicable to the underlying Equity Income ETF.

The Funds

The Harvest Tech Achievers Enhanced Income ETF (HTAE CN) targets an initial yield of 12.8%. The underlying Harvest Tech Achievers Growth & Income ETF consists of an equally weighted portfolio of 20 large-cap companies from across the global technology sector. The fund has a management fee of 0.85%.

The Harvest Healthcare Leaders Enhanced Income ETF (HHLE CN) targets an initial yield of 11.0%. The underlying Harvest Healthcare Leaders Income ETF consists of an equally weighted portfolio of 20 large-cap global healthcare companies selected for their potential to provide attractive monthly income and long-term growth. The fund has a management fee of 0.85%.

The Harvest Equal Weight Global Utilities Enhanced Income ETF (HUTE CN) targets an initial yield of 10.2%. The underlying Harvest Equal Weight Global Utilities Income ETF consists of an equally weighted portfolio of 30 global companies covering utilities, telecommunications, oil & gas storage, and transportation industries. The fund has a management fee of 0.50%.

The Harvest Brand Leaders Enhanced Income ETF (HBFE CN) targets an initial yield of 9.70%. The underlying Harvest Brand Leaders Plus Income ETF consists of an equally weighted portfolio of 20 large-cap companies selected from the world’s top 100 brands. The fund has a management fee of 0.75%.

The Harvest Canadian Equity Enhanced Income Leaders ETF (HLFE CN) targets an initial yield of 9.60%. The underlying Harvest Canadian Equity Income Leaders ETF consists of an equally weighted portfolio of the 30 largest Canadian companies with attractive dividends and a history of maintaining or increasing their payments. The fund has a management fee of 0.65%.

Michael Kovacs, President and CEO of Harvest Portfolios, said: “Harvest has a strong, established reputation for providing equity income ETFs to Canadian investors. The new Enhanced Equity Income ETFs build on that foundation, giving investors higher monthly income by investing in an established equity income ETF with the addition of modest leverage.

“These ETFs access the same portfolios of leading companies and active and flexible covered call strategies used in their underlying ETFs. But they come with a higher yield that many Canadian investors are demanding.”