Driving industrial growth: The strategic launch of Harvest Industrial Leaders Income ETF

This article was produced in partnership with Harvest ETFs.

In 2024, the industrials sector is drawing significant attention due to substantial private investment spurred by U.S. leadership. This attention is driven by the three “Rs” – recovery, rebuilding, and repatriation. The industrials sector offers substantial secular growth opportunities, making it a prime focus for investors.

Industrials are often regarded as the backbone of a modern economy, with some of the largest companies globally being found in this sector. The Dow Jones Industrial Index, for example, has historically maintained a heavy weighting in this crucial space.

For investors seeking exposure to the burgeoning industrials sector, Harvest ETFs has launched the Harvest Industrial Leaders Income ETF (HIND:TSX). Michael Kovacs, President and CEO of Harvest ETFs highlighted the strategic timing and importance of this launch, stating, “The Harvest Industrial Leaders Income ETF was created to tap into the manufacturing industry as it is poised to benefit from the passing of three key pieces of legislation: The CHIPs and Science Act of 2022, the Inflation Reduction Act, and the Infrastructure Investment and Jobs Act.”

Growth drivers in the industrials sector

As part of the recovery process, these legislative measures have already spurred record private sector investment in the manufacturing space, driving growth in various sectors, including semiconductors, clean energy components, electric vehicles, batteries, and related raw materials.

Kovacs elaborated on these growth drivers, stating, “In 2023, the United States manufacturing industry was able to capitalize on the momentum generated by the three significant pieces of legislation that were signed into law in 2021 and 2022.

“These laws have sought to prioritize rebuilding U.S. infrastructure, advancing clean energy initiatives, and building out the domestic semiconductor industry. This new legislation has also aimed to foster job growth, as well as workforce development and workplace equity.”

Rebuilding

These legislative measures provide funding for projects that drive economic growth and prepare the U.S. economy for the transition to net-zero emissions. The IIJA, for instance, includes plans to increase grid resilience, streamline the approval process for transmission projects, and support infrastructure for electric vehicles (EVs), with US$7.5 billion earmarked for EVs. This investment is crucial for advancing clean energy initiatives and building out the domestic semiconductor industry.

Repatriation

A concerted effort has been made to bring domestic manufacturing back to the U.S. The legislative push aims to increase the domestic share of semiconductor manufacturing and foster innovation in automation, which could reinvigorate the U.S. manufacturing base in the 2020s and beyond. According to the Biden administration, the U.S. manufactured only 12% of the world’s chips in 2022, down from 37% in 1990. The CHIPS and Science Act aims to reverse this trend, with significant investment in new U.S. fabs projected to total between US$223 billion and US$260 billion through 2030.

The value proposition of HIND

By writing covered call options on up to 33% of the portfolio securities, HIND aims to generate additional income and mitigate market volatility. The level of covered call option writing may vary based on market conditions, providing flexibility and stability in income generation.

HIND offers investors a dual advantage: exposure to industrial giants driving innovation and the generation of consistent monthly income through a covered call strategy. By focusing on companies that manufacture essential industrial products, engage in aerospace and defense, and provide transportation and logistics services, HIND taps into the heart of the industrial economy. This focus ensures that investors are well-positioned to benefit from ongoing industrial growth while receiving regular income.