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One such ETF is the Harvest Equal Weight Global Utilities Income ETF (HUTL). The ETF holds 30 blue-chip global utility companies, which can help spread out risk and offer convenience and diversification through a single investment. The portfolio holds companies from industries as diverse as electric utilities, telecommunications, oil and gas storage, and transportation, providing exposure to a range of growth opportunities.
“The global exposure offered by HUTL helps to offset some of the risks related to the utilities sector, such as natural disasters, a change in regulations or over-concentration to a particular sector or area that could fall out of favour with the market,” says Paul MacDonald, Harvest ETFs’ chief investment officer and portfolio manager. “By delivering a globally diversified basket of utilities from a range of subsectors, HUTL can offer stability and a high income yield with risks offset by diversification.”
Leading utility companies in the U.S., Canada and the U.K. make up approximately 70% of the HUTL portfolio. The primary goal of the ETF is to deliver consistent and attractive monthly income to investors, along with the opportunity for capital appreciation.
HUTL offers a stake in global utility and telecommunication companies, including Enbridge, Duke Energy, Telefonica, AT&T, BCE, E.ON, Telus and KPN, among others. This global exposure can help diversify regional risk and capture opportunities across different geographic regions.
Owning a basket of companies also helps ensure consistency of income by not relying on one particular region or company for investment growth.
Leading utility players are pursuing emerging global trends through adoption of new technologies, digitization, infrastructure upgrades and renewable power generation, each unlocking new growth opportunities for productivity and profitability.
Income generation in a utilities ETF
An attractive aspect of HUTL is the use of an “active covered call strategy” to boost the amount of income it generates each month. The covered call writing strategy involves selling call options on the securities held within the fund to generate higher income.
“Utilities is often considered an attractive sector because of the dividends many utilities companies pay,” MacDonald says. “By adding to those dividends with an active covered call option strategy, HUTL can deliver even more of the income and volatility offsets that investors often seek in utilities.”
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