A Smart Balance for Retirees: HBIG Blends Tradition with Innovation

Image by Harvest ETFs

By Ambrose O’Callaghan

(Sponsor Blog)

Canadians in or nearing retirement may be seeking out an investment that provides stability in the face of broader market and economic challenges. Balanced mutual fund portfolios have remained the most popular form of investment fund among Canadians.

However, most current balanced mutual funds and ETFs in the Canadian market provide income at levels below inflation rates. Moreover, these balanced funds/ETFs often pay quarterly, semi-annual, and annual distributions as opposed to monthly.

Today, we zero in on a balanced ETF designed to offer stability, growth opportunities, and high monthly cash distributions.

Today — April 15, 2024 — Harvest ETFs launches the Harvest Balanced Income & Growth ETF (HBIG:TSX). This exchange-traded fund (ETF) is designed to provide Canadian investors of all ages — and especially those in retirement — with access to a balanced portfolio consisting of primarily Harvest Equity Income ETFs and Harvest Fixed Income ETFs that deliver high monthly cash distributions.

For those  looking for more cash flows to help bridge the income gap, or who want to meet RRIF withdrawal minimums, we have also launched the Harvest Balanced Income & Growth Enhanced ETF (HBIE:TSX), an alternative fund that uses leverage. This ETF seeks to provide unitholders with high monthly cash distributions and the opportunity for capital appreciation by investing, on a levered basis, in a portfolio that seeks to replicate HBIG. With the use of the leverage, the risk rating for HBIE is slightly elevated relative to HBIG.

Here is a link to the Business Wire news release issued this morning.

What is a balanced portfolio? How is Harvest changing the original formula to meet investor needs in 2024? Let’s jump in.

What makes up the traditional 60/40 portfolio?

According to the Investment Funds Institute of Canada (IFIC), the number of mutual fund assets in Canada totalled $2.012 trillion at the end of February 2024. That was up 2.9%, or $57.1 billion, from January. Meanwhile, ETF assets totalled $403 billion at the end of the same period – up 4.1% month over month.

Balanced mutual funds make up $923 billion, nearly half of the total mutual funds operational in Canada. That means that Balanced portfolios are the most popular among Canadians who are invested in mutual funds. ETFs, by comparison, are heavily weighted in Equity and Bond funds, while Balanced ETFs only make up $16.5 billion out of $403 billion.

A balanced fund typically refers to a portfolio that is broken down by 60% equity and 40% fixed-income exposure. That ratio allows for capital appreciation while mitigating risk and providing protection from volatility with the exposure to bonds. While the 60/40 ratio is a proxy for the typical balanced portfolio, it is not one-size-fits-all. Some balanced portfolios may aim for ratios that weigh either equities or bonds more heavily.

How do covered calls generate high income?

Harvest ETFs believes wealth is created and preserved by owning leading businesses and high-quality fixed income securities. Moreover, Harvest is a market leader in covered call options ETFs. Harvest has been writing covered call options for 15 years. Moreover, the firm has a strong track record for delivering consistent distributions.

Covered call ETFs generate cash flows for unitholders from a portfolio of securities with a covered call option writing strategy. Harvest launched its first ETFs in 2016. Since then, it has established itself as one of the top covered call option writing firms in Canada. Harvest utilizes an active and flexible call option strategy to build high yield ETFs that pay monthly distributions and still capture the opportunity for market growth.

HBIG: Blending tradition with innovation

The Harvest Balanced Income & Growth ETF, or HBIG, seeks to blend the traditional 60/40 balanced portfolio with the innovation of Harvest’s time-tested covered call writing strategy. That way, the ETF achieves balanced growth and income while delivering consistent high monthly distributions through its covered call strategy.

HBIG will contain 60% Harvest Equity Income ETFs. This will include the Harvest Healthcare Leaders Income ETF (HHL:TSX), which has paid out more than $400 million in total distributions since inception, and the Harvest Tech Achievers Growth & Income ETF (HTA:TSX), which has won a Lipper Award for two consecutive years. Covered calls will be written on up to 33% of the Equity Income portion of the portfolio.

Meanwhile, HBIG will also contain a 40% Fixed Income ETF portion. This will include the Harvest Premium Yield Treasury ETF (HPYT:TSX) and the Harvest Premium Yield 7-10 Year Treasury ETF (HPYM:TSX). Covered calls will be written on up to 100% of the Fixed Income portion of HBIG.

The traditional 60/40 balanced strategy, combined with the covered call writing strategy, allows investors to get exposure to the traditional approach to a balanced growth and income result while generating high monthly income through the writing of call options.

Ambrose O’Callaghan is Senior Copy Writer at Harvest ETFs. Ambrose brings over a decade of experience in the financial services industry to the Content Editor role. He is responsible for providing context to current trends, developments, and analyses to help make sense of the ETF market and emerging themes. With a strong knowledge of the Canadian equity markets and Harvest products, Ambrose regularly provides commentary on a broad array of market topics.



The information is meant to provide general information for educational purposes. Any security mentioned herein is for illustration purposes and should not be taken as an invitation to purchase or sell such security.

Commissions, management fees and expenses all may be associated with investing in Harvest Exchange Traded Funds (managed by Harvest Portfolios Group Inc.). Please read the relevant prospectus before investing. The indicated rates of return are the historical annual compounded total returns (except for figures of one year or less, which are simple total returns) including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. 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.

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 Fund. The FLS are not historical facts but reflect Harvest’s, the Manager of the Fund, current expectations regarding future results or events. These FLS statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Although Harvest, the Manager of the Fund, believes 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. Harvest, the Manager of the Fund, undertakes 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.


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