Harvest launches global resources and U.S. bank ETFs

Morningstar Canada 5 February, 2018 | 10:00PM

Harvest Portfolios Group Inc. has launched two actively managed exchange-traded funds, investing in global resources and U.S. bank stocks respectively. Both will employ covered-call options to reduce volatility and generate option-premium income.

Harvest Global Resource Leaders (HRES) and Harvest U.S. Bank Leaders Income (HUBL) opened for trading today on the Toronto Stock Exchange. Also offered are U.S.-dollar-denominated units of the U.S. banks ETF, trading under the symbol HUBL.U.

Harvest Global Resource Leaders will invest in an equally weighted portfolio of 20 to 30 resources stocks, each of which has a market capitalization of at least US$2 billion at the time of investment. The portfolio will be diversified by geography, by sub-sector and by commodity exposure. It will be rebalanced at least quarterly.

Harvest U.S. Bank Leaders Income, whose portfolio will also be equally weighted and rebalanced at least quarterly, will hold shares of 15 to 20 U.S. bank stocks. To be eligible for inclusion, a stock must have a market capitalization of at least US$10 billion at the time of investment.

Stock selection for both ETFs will be based on a combination of value, quality and growth criteria, subject to the minimum market-cap thresholds. The portfolio managers will selectively write covered calls on up to 33% of the portfolio securities. Distributions are scheduled to be paid quarterly by the resources ETF and monthly by the one investing in U.S. banks.

The management fee for each of the new ETFs is 0.75%, not including operating expenses. They are managed internally by Harvest's portfolio managers led by chief investment officer Paul MacDonald. Based in Oakville, Ont., Harvest was founded in 2009 by president, CEO and chairman Paul Kovacs.

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