Harvest Portfolios has announced that it has filed a preliminary prospectus with Canadian securities regulators for two new ETFs: the Harvest Equal Weight Global Utilities Income ETF ("HUTL") and Harvest Global Gold Giants Index ETF ("HGGG").
“These two new ETFs add defensive bench strength to our growing line up of products,” said Harvest President and CEO Michael Kovacs. “Arguably, we are in late innings of the economic cycle, so it makes sense to prepare a portfolio with more defensive products; both quality and established Utility and Gold issuers can help fill that ticket.”
The Harvest Equal Weight Global Utilities Income ETF is designed to provide unitholders with monthly cash distributions and the opportunity for capital appreciation. The fund also seeks to provide lower overall portfolio-return volatility than would be expected from directly owning equity securities of global utility issuers.
To mitigate overall volatility in portfolio returns, HUTL will generally write covered call options on up to 33% of the portfolio securities; market volatility and other factors may affect the level of covered call option writing. According to the preliminary prospectus, HUTL will invest in an equally weighted portfolio of equity securities of 30 top-ranking global utility issuers, which are chosen at least quarterly based on their market capitalization and availability of call options with sufficient liquidity.
Meanwhile, the Harvest Global Gold Giants Index ETF seeks to replicate, to the extent reasonably possible and before fees and expenses, the performance of the Solactive Global Gold Giants Index TR. HGGG primarily invests in large gold mining issuers listed on regulated stock exchanges in North America, Australia, or in certain European countries.
The preliminary prospectus filed with regulators says that Harvest may employ a “sampling” strategy for HGGG, under which the fund’s portfolio would not contain all the constituent securities in the Solactive Global Gold Giants Index TR. Instead, the portfolio would be a collection of securities that closely match the aggregate investment characteristics — such as market capitalization, industry sector, weightings, and yield — of the securities in the index.
The sampling methodology may be used when necessary constituent securities are difficult to acquire, or when asset levels of the fund prevent it from holding all the constituent securities of the index.
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