As trade tensions persist, Harvest ETFs' suite offers targeted, income-driven alternative
This article was produced in partnership with Harvest ETFs.
In a market where concentration risk is increasingly difficult to ignore, single-stock ETFs are drawing new scrutiny - and new interest.
These vehicles, once considered tools for tactical traders, are gaining traction with yield-focused investors. But concerns around volatility, leverage, and transparency remain front and centre.
Single-stock ETFs have long carried a reputation for being high-octane tools best suited to traders with a strong stomach. Their concentrated exposure and potential use of leverage can invite sharp swings—especially when markets turn volatile. But Harvest Portfolios’ High Income Shares suite is reframing that narrative with a risk-aware, income-focused approach that’s attracting growing interest from Canadian investors.
“A good first step in evaluating the risk of any ETF is to look under the hood,” says Chris Heakes, Senior Portfolio Manager at Harvest ETFs. “Single-stock ETFs obviously have exposure to only one stock, so they don’t have the diversification profile most ETFs offer. Looking at the volatility of the stock in question is a good starting point for evaluating risk.”
This is where Harvest High Income Shares begin - by acknowledging the nature of single-stock exposure and engineering a structure around it that blends income generation with risk management. With carefully calibrated leverage, a disciplined covered call overlay, and transparent product design, these single stock ETFs aim to bring institutional-level tools to retail investors- without overwhelming them.
A more nuanced approach to options
The Harvest High Income Shares suite apply a consistent framework: modest leverage—typically 25%—paired with a systematic covered call strategy. The result, Heakes explains, is a combination of monthly income and a tempered risk profile.
“We’re not trying to eliminate risk. That’s not realistic with any equity exposure,” he says. “But we do aim to build products where the levers are clear and purposeful - income, growth, volatility management.”
The risk conversation doesn’t end at the equity level. Each High Income Shares product is unhedged, exposing investors to the U.S. dollar - a move that, in times of market stress, has added a counterbalancing force.
What distinguishes HHIS structurally is not just the call-writing overlay, but how it’s deployed. Instead of blanketing the entire position, Harvest limits its call exposure to 50% of the underlying security. That leaves room for capital appreciation while still generating meaningful income.
“It’s about finding the middle ground,” Heakes says. “Investors in single-stock products are taking on elevated portfolio risk. In return, they should be positioned to benefit from both income and potential upside.”
Covered call premiums vary with volatility, so yield across the HHIS suite reflects the nature of the underlying equity. In more volatile stocks, monthly income can reach double-digit annualized yields. But those figures, Heakes points out, aren’t engineered - they’re grounded in prevailing market prices.
“The income we generate is a function of the option premiums available,” he says. “We’re not overstating what the market is willing to pay.”
Building exposure where Canadian portfolios fall short
At a time when Canadian investors are reassessing home bias, HHIS also offers exposure to sectors and names largely absent from domestic indexes. With 14 U.S. stocks in the current lineup -including Nvidia, Microsoft, Amazon, and Eli Lilly - the suite targets growth themes in tech, healthcare, and financials.
In January, the company also launched the Harvest Diversified High Income Shares ETF (HHIS:TSX). This ETF offers a multi-sector portfolio that holds Harvest single stock ETFs, combining the benefits of income generation with access to leading businesses across various sectors.
Heakes highlights, collectively, these names represent over $20 trillion in market capitalization – many times larger than the size of the entire S&P/TSX Composite Index.
The rise of single-stock ETFs like Harvest High Income Shares also reflects broader trends. Investors are increasingly seeking clarity, value, and yield - all without sacrificing the potential for equity growth. And in that environment, the question becomes less about whether single-stock ETFs are too risky, and more about how intelligently those risks are being managed.
“Investors are looking to do more with each dollar,” Heakes says. “We’re trying to meet them with products that are transparent, deliberate, and aligned with where portfolios are heading.”
