Harvest ETFs Launches Two Funds Designed to Thrive in Volatile Times

Markets never move in a straight line, especially when they need to navigate obstacles like shifts in U.S. policy, global tensions and persistent inflation. These forces caused periods of turbulence over the past year, and they promise more volatility ahead. But challenging circumstances can also create opportunities for investors who are armed with the right kind of financial tools.  

Somewhere between the potential rough and tumble world of equities and the meager returns of fixed income investments lies two new funds that were launched this January by Harvest ETFs: the Harvest Premium Yield Canadian Bank ETF (TSX:HPYB), and the Harvest Premium Yield Enhanced ETF (TSX:HPYE).

Both funds are designed to deliver twice monthly cash distributions – a first for Harvest – along with a three pronged income generating strategy that combines upside exposure to equities, covered call writing, and put selling.

Covered call strategies generate immediate income by collecting premiums from selling call options on a holding. In return for this added income, the holding’s potential upside is partially capped.

Put strategies work on the buy side of the equation. They can serve as a disciplined way to buy stocks on dips, given the put seller only acquires the shares if the price falls to a predetermined value. The premium collected from the sale of the put generates income while potentially lowering the effective purchase price of the stock.

Chris Heakes, Senior Portfolio Manager at Harvest ETFs and the fund manager for HPYB and HPYE, sees this as a powerful strategy in volatile times. “We've got exposure to equity growth. We've got income being generated on the calls side of the portfolio, and we have the puts side that earns us premiums and gives us the ability to buy stocks at more favorable prices. It cushions volatility. That's why I think these funds can be really effective tools in this type of market.”

While HPYB and HPYE share the same basic investment strategy, they represent distinctly different funds. The Harvest Premium Yield Canadian Bank ETF provides access to an equal-weight portfolio of the six leading Canadian bank equities - all with strong fundamentals and growth potential. Each bank is a highly regulated diversified business on its own. They are a great source of reliable, consistent dividend income, and they have historically proven to be stable across economic cycles.

“Canadian investors love their bank equities”, Heakes declared. “It's a great segment of the Canadian market known for historically market beating returns that come without adding excess risk”.

In fact, the average annual return over the last 20 years (to Dec 31/2025) for the S&P/TSX Composite Banks Index was 11.3%, while the S&P/TSX Composite Broad Index was a relatively light 8.3%.

The Harvest Premium Yield Enhanced ETF on the other hand provides investors access to a diversified portfolio of 20 dominant industry-leading US equities, a list that

could include the likes of Nvidia, Amazon, Caterpillar, Berkshire Hathaway, and McDonald’s at any given time, drawn from holdings in Harvest’s innovative core ETF lineup.

“With the U.S. you obviously have a different scale of business relative to many of the companies in Canada”, Heakes said. “You also get more technology, healthcare and high-growth companies, along with exposure to global industrials. So, there's a lot of very attractive businesses there”.

Heakes added, “The US market by-and-large has been a great place for value creation the last 20 years as measured by the S&P 100. It averaged an annual return of 11.6% over that period, more attractive than the TSX at 8.5%, and far better than international equities (MSCI/EAFE indexes) at 7.1% annually. Also keep in mind that many of the companies we own are part of a select basket of equities that in many cases were large drivers of this past performance”.

Beyond the growth potential of HPYB and HPYE, they both provide a twice-monthly distribution that will start at $0.07 per unit. This means if you owned 1,000 units, you would receive two payments of $70 for a total of $140 each month, generating attractive income for clients.

Further benefits can be derived through tax efficiencies that are a feature of both funds. For HPYE, option premium income is not subject to U.S. dividend withholding tax. In Canada it is generally treated as a capital gain, and this can be more tax efficient than receiving dividends that incur the 15% U.S. withholding tax.

In the case of HPYB, the distribution is funded primarily with bank dividends and option premiums, with, dividends taxed at a more favourable rate than regular income and the option premiums generally taxed on the capital gain account.

Investors who like what they’re reading and want to buy into either HPYB or HPYE will be charged a 0.65% management fee, which is highly competitive, given the more dynamic strategies employed by these funds.

The launch of HPYB and HPYE reflects a development process years in the making. Harvest Portfolios Group was founded in 2009 and later launched its ETF division in 2016, when it introduced its first exchange traded funds to the Canadian market. Since then, Harvest ETFs has seen tremendous growth and now boasts over $10 billion in assets under management.

The company has always been focused on acquiring quality businesses that create long term value, with a particular emphasis on ‘harvesting’ - pun intended - regular income from those investments.

Today, Harvest ETFs has one of the most experienced option income teams in Canada which manages a well-rounded lineup of covered call ETFs, including the largest healthcare ETF in Canada. The introduction of HPYB and HPYE further broadens this suite, adding new income‑oriented strategies to the firm’s growing product portfolio.

Investors looking to learn more about the Harvest Premium Yield Canadian Bank ETF or the Harvest Premium Yield Enhanced ETF can go to Harvest ETFs | Equity Income ETFs | Harvest Portfolios Group where you’ll find product information, insight blogs, and videos.

_{FULL DISCLOSURE: Harvest ETFs is a client of BTV-Business Television. This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. Any action taken as a result of reading information here is the reader’s sole responsibility.}

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