A New Way to Invest in Gold: Harvest Launches Premium Yield Gold ETF

Gold has long played a key role in diversified portfolios. Gold tends to hold its value during periods of economic and geopolitical uncertainty, and as concerns around government debt, fiscal spending, and the global economy persist, many investors continue to view gold as a reliable hard asset that can help balance risk alongside traditional investments.

But when it comes to investing in gold, there is a traditional trade-off between physical gold or gold bullion, which provides direct exposure to the price of gold, but offers no investment income, and its returns are largely tied to movements in the price of gold. Gold equities on the other hand, can offer greater upside potential than bullion as mining companies benefit from rising gold prices, but they can also come with some volatility and company-specific risks. When it comes to ETFs, most gold-focused products provide exposure to only one or the other.

Harvest ETFs is looking to bridge that gap, with the launch of the Harvest Premium Yield Gold ETF (TSX: HPYG). Introduced this July, the new ETF combines exposure to physical gold bullion through SPDR Gold Shares ETF (NYSE:GLD), along with leading global gold equities, while seeking to generate monthly cash distributions to investors through an active options strategy that includes covered calls and put writing.

Mike Dragosits, Portfolio Manager at Harvest ETFs and manager of HPYG, believes the ETF offers investors a new way to access the gold market. "Investors have traditionally had to choose between the stability of gold bullion and the growth potential of gold equities," he says. "With HPYG, we're bringing those two sources of exposure together in a single ETF while also aiming to generate monthly income.”

According to Dragosits, the gold bullion component of HPYG provides investors with exposure to an asset class that has historically behaved differently than traditional stocks and bonds. During periods of market uncertainty, economic stress, or persistent inflation, gold has often been a valuable source of portfolio diversification.

Instead of purchasing and storing physical gold bullion—which can involve storage fees and insurance costs — HPYG uses the GLD to gain exposure to the price of gold. Because GLD is backed by physical bullion, investors receive the benefits of gold exposure in a more liquid and cost-efficient format.

While the bullion component of HPYG provides direct exposure to the price of gold, the ETF's allocation to leading gold producers offers the potential for enhanced returns. Rising gold prices can have an amplified impact on their profitability and, in turn, their share prices.

Together, the two components of the HPYG are designed to complement one another.

To generate monthly cash distributions, Harvest employs an active covered call strategy on a portion of its holdings. By selling options on securities it already owns, the fund collects option premiums that can provide an additional source of income and help cushion periods of market volatility. In exchange, investors may give up a portion of the upside during periods of strong market gains.

In addition to its covered call strategy, HPYG also uses put writing to enhance its income potential and add flexibility to the portfolio. By selling put options on select gold equities, the fund generates additional option premiums while creating the opportunity to purchase those companies at potentially more attractive prices if the market declines. This approach provides additional exposure to gold equities while maintaining cash collateral in the portfolio to manage risk.

Dragosits believes the combination of covered calls and put writing creates a compelling strategy, “By having both call writing and put writing, we’re able to generate attractive yield for investors while maintaining greater flexibility in managing the portfolio. We’re essentially getting paid to wait—to potentially buy stocks at more attractive levels, while also getting paid to potentially give stocks away at higher valuations.”

The launch of HPYG builds on Harvest ETFs' long experience managing income-focused investment strategies. For well over a decade, the firm has used covered call strategies across a range of sectors and markets - including technology, healthcare, utilities, and broad equity markets – helping investors access leading companies while seeking to generate consistent cash flow.

That experience has helped Harvest build a significant track record in the ETF marketplace, with the firm having paid roughly $3.3 billion in cumulative distributions to investors. With HPYG, Harvest is applying that same income-focused approach to the gold market, combining covered call and put writing strategies with exposure to gold bullion and leading gold producers.

With continued investor interest in gold and gold equities, some investors may be looking beyond simple exposure to the price of gold and toward strategies that can help generate income while maintaining participation in the market. HPYG is designed for those investors—combining the diversification potential of gold with an active approach aimed at producing monthly cash flow.

"If you want gold exposure but also want to generate income within a strategy that takes advantage of opportunities to buy on weakness or sell into strength, HPYG offers a disciplined way to do both," says Dragosits.

For more information on Harvest ETFs, go to harvestportfolios.com, where you can explore the full suite of products as well as valuable market insights.

Disclaimer

For Information Purposes Only. All comments, opinions and views expressed are of a general nature and should not be considered as advice and/or a recommendation to purchase or sell the mentioned securities or used to engage in personal investment strategies.

Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds managed by Harvest Portfolios Group Inc. (the “Funds” or a “Fund”). Please read the relevant prospectus before investing. 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.

Distributions are paid to you in cash unless you request, pursuant to your participation in a distribution reinvestment plan, that they be reinvested into Class A units of the Fund. If a Fund earns less than the amounts distributed, the difference is a return of capital.

The Fund is categorized as a liquid alternative ETF. This means it has the ability to use leverage and can invest more than 10% of its assets in a single issuer. The Fund employs modest leverage, which can amplify both gains and losses.

Certain statements included in this communication constitute forward-looking statements (“FLS”, including, but not limited to, those identified by the expressions "expect", "intend", "will" and similar expressions to the extent they relate to the Funds. The FLS are not historical facts but reflect the Harvest’s and the portfolio manager of the Funds current expectations regarding future results or events. These FLS are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although Harvest and the portfolio manager of the Funds believe that the assumptions inherent in the FLS are reasonable, FLS are not guarantees of future performance and, accordingly, readers are cautioned not to place undue reliance on such statements due to the inherent uncertainty therein. The Funds, Harvest and the portfolio manager of the Funds undertake no obligation to update publicly or otherwise revise any FLS or information whether as a result of new information, future events or other such factors which affect this information, except as required by law.