More Money Podcast - 304 How to Fit Thematic ETFs into Your Investment Portfolio - Michael Kovacs, Founder, President and CEO of Harvest Portfolios Group

Episode Date: November 18, 2021

You know that I love talking about investing on the podcast, especially when I can get different perspectives about the topic. For today’s bonus episode, I’m joined by Michael Kovacs, the founder, president & CEO of Harvest Portfolios Group.  Michael Kovacs got his start as a stockbroker in the '80s, which would later influence his decision to start Harvest Portfolios Group in 2009. Michael believes that the best way to create wealth is to invest in quality companies for the long term. This is reflected in the ETFs developed by Harvest, which are focused on investing in strong businesses that have the potential to grow and generate steady income over time. In this episode, Michael shares why Harvest is different from other ETF portfolio companies and breaks down how they also use options in some of their ETFs in order to generate income and growth.  For full episode show notes visit: https://jessicamoorhouse.com/304 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome back to the More Money Podcast. This is Episode 304, and I'm your host, Jessica Morehouse. Welcome back to the show for this special bonus episode. Very excited. We really go into a very interesting topic just about thinking kind of outside the box and just thinking of investing in a different way and specifically investing in different products than maybe your typical index fund like I do harp on a lot on this show. So for this episode, I have the pleasure of chatting with Michael Kovacs. He's the president and CEO of Harvest Portfolios Group Inc., which he founded in 2009. I know an interesting year. We do talk about that in the show because I'm curious like, wow, 2009 was a bit of a rough year. What inspired you to start your own investment company?

So he has been a veteran in the industry for 35 years, 35 years. And since 1991, he has held senior management positions with four major companies in the investment field. And not only that, though, before, you know, kind of as he started out, he did begin his career as an investment advisor and for seven years managed the money for individual investors. So he has an interesting perspective of working with, you know, clients one on one, and then also then being on the other side of things more in the kind of product development side of things. So we have a really great conversation. Now, since I'm sure after this episode, you're going to want to kind of take a look at some of the because we do deep dive and talk about some specific ETFs that Harvest provides that I found really interesting that

really focused on just investing in clean energy companies or blockchain companies or space innovation companies, you know, very kind of niche or focused ETF. So if you want to check out those for yourself, learn more, you can check them out at harvestetfs.com. Of course, you can also follow Harvest ETFs on Twitter and Instagram at Harvest ETFs. And also make sure to check out their podcast. They have a podcast as well called Harvest Talks Podcast. You can find that at harvestportfolios.com slash podcast. They have a podcast as well called Harvest Talks Podcast. You can find that at harvestportfolios.com slash podcast. But honestly, on their website, there are so many actually great resources. Sometimes I feel like we forget that these, you know, fund companies actually offer some great free resources that have really great research attached to them. So make

sure to again, check them out at harvestportfolios.com. But also I should mention, I'm going to include all of these links. So it's all in one place, all the kind of key things that you're going to definitely want to check out in the show notes for this episode. Just go to jessicamorehouse.com slash 304. And FYI, if you're ever looking for the show notes, that is like, you know, basically, information and links and things that you want to check out after you listen to an episode on my website, It's always jessicamorehouse.com slash the number of the episode, or you can find all the show notes at jessicamorehouse.com slash podcast. Okay, without further ado, let's get to that interview with Michael. Welcome, Michael, to the More Money Podcast. I'm thrilled to have

you on the show. Well, thank you, Jessica. I'm happy to be here. Yeah. So very excited to have you on the show. Well, thank you, Jessica. I'm happy to be here. Yeah. So very excited to have you on the show to talk for this full episode about ETFs, something I love to talk about and talk about endlessly with anyone who wants to talk to me about investing. You really have been in the investment industry for a very long time, not calling you old, calling you very experienced and an expert in your field. And I've obviously seen such a transformation with ETFs over all of these years. And even for me, just seeing ETFs evolve over the past 10 years has been very interesting. So I want to kind of, and also, you know, not to also say, you know, I find it very interesting too, that you founded a Harvest Portfolios Group in 2009, which is a very interesting time to start a company like that. So let's start with kind of your background. You've been in the industry for a very long time. What got you into the world of

investing? Well, I started in 1985 as a stockbroker. And the reason why I went that route is I was very interested in stocks from sort of my teen years. And that sort of led me into the stock market. And it was very different in those days. You were a full service broker. You worked for one of the seven or eight firms before even the bank stepped in and bought all those firms up. So, excuse me, it was a very different time. But I sort of, without getting into all the details, trans, overtime trans, and moved into management, sales management. Then one day, I think it was 1990, I was reading the paper and was surprised at how the U.S. mutual fund industry had hit a trillion dollars. And I mean, that just seemed like an unbelievable amount of money.

And the Canadian industry at that time was about 40 billion, so quite a bit smaller. And I really wanted to sort of move to that side of the industry and start getting involved with it. So I did. And I went to a company called Guardian Capital at the time. They had a small mutual fund company and sort of got a lot of experience, really enjoyed the investment management side of it, the sales and marketing side of it, and felt I had a knack and ideas that I could bring to the market at some point in the future. But when you're working and things are going really well, you don't really leave your job. So to make a long story short, 2009 came around, the market got crushed. I found myself out of work. And I thought,

well, this is the time to start a business, to start a company. And we were at, you know, in the sort of smoking embers of the financial crisis. I was advised not to set up a company. It was suicide, one person said to me. But I thought, well, you know, no bad track record, no good track record. Let's just start building a track record at this point. And that's when we started Harvest and founded the company at that time and got our first little fund launched,

our Banks and Buildings Fund. The rest is history. Just built it up. And in 2016, our banks and buildings fund. The rest is history. Just built it up. And in 2016, we started the ETF business. And now we're a $2 billion company. So it's been fantastic. I guess you showed them. A lot of years in between.

But it's been a lot of work. But now we're starting to really see the growth and the success of our philosophy. Yeah. Yeah, yeah. I can understand why some people might be like, oh, this may not be the best time to start this kind of company. But I mean, maybe you just had the foresight because you've seen some crashes and corrections in your career. And you're like, well, I mean, there's only up from here, hopefully.

So that's kind of one way to think about it. And you're right. And luckily, I caught on to Warren Buffett very early in my career, started following him, reading a lot about what he was doing and how did this guy become a billionaire as an investor as opposed to running a company or building a Microsoft or something like that. And, you know, it's that sort of philosophy. I realized if you own quality and stay with it over the long term,

you'll ride through the good times and the bad times because they will come. We've had great markets recently. At some point, the market will get hit again, whether it's next year or two years from now, it'll happen. And you sort of have to take that into scope when looking out over the long term. So in starting Harvest, I knew at some point markets would come back. So let's focus on quality and growth and build the company that way. I'm curious, since we did just experience that last spring, it almost feels like 10

years ago. It was only like a year ago. What was your experience like, you know, since you started in 2009 and here we got our, you know, very kind of similar feelings of panic in the market and everyone just saying doom and gloom and comparing it, of course, to the, you know, Great Depression and all that kind of stuff. What was your reaction to what happened in March 2020? Well, it's always scary when these things happen because you don't know what direction it's going to go in,

especially with a pandemic. We, you know, we're dealing with something completely new. We didn't know how badly it was going to affect, obviously, human life, the world as we knew it, the economy. And as we sort of got four or five months into it, we realized, you know realized things are coming back. It's unbelievable how quickly the medical, pharmaceutical business jumped to the, to command, if you will,

to start developing vaccines and getting them out. It's the fastest vaccines have ever got out in the history of the human race. So that's when things started to come back and you realize we will get through this eventually. It just, it takes how bad it gets we don't know but um again it was one of these scenarios that you just stick with it and and uh stick with quality and stick with good companies so it was scary but it did come back it did thank goodness for that because yeah i wasn't sure what was gonna i mean as someone who you know I'm a millennial I graduated university in 2009 and so that was a big part of my adult you know uh entry point into

adulthood of you know it's just like everyone losing their retirement funds is what it seemed like you're like oh is this what investing is like I don't think so this is scary um it was very reminiscent but also because now I have that experience and also so much more knowledge compared to when I was in my 20s. Yeah, like you, I'm like, okay, what I've learned and also my experience is to just stay in the market. Just don't react. Don't let your emotions run rampant because that never helps. And then just kind of do nothing out of the ordinary. And I think the people that did that are glad that they did that.

And a lot of people that maybe this was the first time they've experienced something like that. And maybe if they they cashed out or freaked out, they may be not, you know, maybe wishing they made a bit of a different difference. But I think that's why it's so important. It's hard to do. It's hard to do. It is the hardest thing in the world to do nothing. Right? Yeah. When you're in the middle of the trees, you know? Right? Yeah.

When you're in the middle of the trees, it's hard to see the forest, as they say. And it's true. I mean, even myself, I said I started in 85. I was only two years into the business when the crash of 87 came. And I just smoked everything. And, you know, I was sort of sitting back like, oh, what do I do now? So it's sort of you learn these lessons as an investor. And it always goes back to own quality, own great companies that you feel comfortable with. And you'll do fine,

you're going to have to ride it the volatility, but you'll do fine over time. So I want to kind of dig in, do a little bit about a harvest specifically. Just because, you know, I think some people may be used to hearing about like some of the big ETF mutual fund providers. Harvest is, you know, I mean, it's still a big company with that valuation or how much assets you have under management. But yeah, tell me a little bit about Harvest and how is it, I guess, different than some of the other kind of providers in Canada? I know you have some mutual funds and now really ETF seems to be your kind of biggest product offering, but what is kind of, I guess, when you were starting the company, what was your goal, your kind of philosophy and how you want to kind of be a bit

different than what was already out there? Right. Well, going back to when I was talking about Buffett, when I launched Harvest, I really wanted to focus on equity products and owning equities for the long term. And there's a number of different types of investment products out there and different categories like fixed income and bonds and so on. But I really believed that the way to create wealth over the long term is by owning great companies. And if you think about who are the wealthy people today? Where is wealth being created? Well, a lot of that's here in North America, but Europe and Asia, a tremendous amount of this is being created. And it's not being created by government handouts.

It's being created by business people or entrepreneurs going out there and developing a concept and building it over time. So why not put together portfolios in sectors that we see as long, that have long-term growth trends to them, and then really try to select what we feel are the best companies and hold on to them for the long term. So in starting Harvest, you know, our very first fund was the Banks and Buildings, is what we call it. It's a mutual fund now. It's very small. But the idea was you had the Canadian banking system got hit very hard after the financial crisis in 2009,

but it actually wasn't damaged at all compared to what had happened in the United States. You could get yields on Bank of Montreal, 9%, 10% in dividends. It was ridiculous. So I couldn't get it there fast enough to get a fund launched because I could see this huge opportunity. And by the time we actually got it launched, I think yields were down to about 5%.

So things did change. But that fund's had, I think, a 9% compounded annual rate of return over 10, 11 years now. And the idea is that's one idea. But all of our ideas we were launching were similar. Let's choose great industries. Let's choose great industries. Let's choose the top companies. Let's position ourselves in them so that we're not trading them, but we're staying with them over the long term. And we're fine tuned. We'll buy and sell a little bit, but

over the long term, let's just try to build that portfolio of all these different funds that are following that same philosophy. And that's really what we did as sort of closed-end structured products until 2016 when we launched the ETF company. And then we transferred a lot of those concepts into ETFs and then built it from that point. So it's the same underlying philosophy, Jessica. It's just let's apply it to different areas, whether that's clean energy, whether that's health care, whether that's technology. Let's focus on the same philosophy, but apply it to different parts of the market. I want to kind of dig in because I'm kind of curious and I think most people would be curious, too, from the perspective of one of these ETF providers. How do you decide what companies to put into, say, a clean energy ETF? Or you mentioned also you have

a healthcare one. There's also like a blockchain and space. You have a lot of different ETFs. How do you decide what to put in there when you're in the development stage of an ETF? That's a good question. That's a good question. So once you've sort of chosen the sector or the industry that you want to be into, then you start going through sort of a filtration process where you look at the universe of companies out there and you say, well, we only want to be, say, in the healthcare situation. We only want to be in the largest, most prominent global healthcare companies. So we'll screen maybe from 3,000 companies down to 100, 150. And at that point in time, we start

really looking at, well, where are the areas of the healthcare sector that we want to be in, whether it's big pharma, big biotech, medical equipment, we want to choose the sectors, the subsectors, if it will. And then what are the top companies there? And we start looking at the history of the company, the financial metrics, their earnings, their dividend payments. The management team is very important, their track record of success. And you really filter it down to your 20 from that in the case of the healthcare fund. And then we'll go back and continue to sort of revisit it every quarter and take a look over all those companies again and decide, should that one go out now?

Is there a new one that should come in? Did one get bought out? Should we replace it? And that's your sort of ongoing management of that portfolio. But once you've got that concept set, it's really a matter of managing it and monitoring it going forward. So that would be the same for clean energy. That would be the same for, I mentioned blockchain. That's a little bit different because that's a very fast emerging area. But technology is the same. Even what we have, we have a brand leaders file, which is all sort of large cap global brands. So same concept over and over I talk a lot on this podcast about, you know, kind of the investment strategy that I participate in, you know, index investing, passive investing. So, you know, and I think in general, it's a great strategy for most investors. How would if someone's looking at some of your kind of more specific kind of niche ETFs like, you know, the blockchain or space innovation or clean energy or what have you, how can you still be an index investor and have that part of your portfolio? Or if not, if someone is trying to figure out what kind of portfolio they want for, say, their retirement goal, how would they integrate some of these ETFs into their portfolio? Well, in the case of, say, blockchain or even

our space innovation, which is Orbit, those are a little more passive index type products. And I think when you're looking at those different types of funds, you really have to be saying, this is the growth component of my portfolio. So I'm buying this component to put away, it may only be 2%, but I'm buying that to position in blockchain because I see that as a real disruptive, great growth area in the technology business for the next 10, 20 years. So here's my way to position there. Or clean energy, the same idea. If you really agree and believe that this is the to the clean energy market, if you will?

Or orbit, for that matter, or space innovation. This is a sort of an odd, unique area. It's a tiny little fund, but we love what we see happening there from the standpoint of not only just commercial space travel, but the way private enterprises stepped into that area and actually assisting governments and making them more efficient and saving them billions while making billions themselves as organizations. Why not own a position there and stay with that? So those are really growth smaller specialty areas and then our other products like like healthcare we talked about we have an active option strategy on that so the idea there is to generate income um over the long term in that case it's uh an eight percent yield of

that fund so if you're an older investor and you're uh you're looking to supplement your income in this low interest rate environment, there's a great way to own a great sector. A growing sector allows you to grow your capital while drawing out a great income. So at the end of the day, everything's boiling down to that same, do we believe in the long-term growth of markets and where these particular areas are going? Yes, we do. Okay, so let's position there, whether it's for income, or whether it's just for pure growth.

So really figuring out first what you need, whether it's growth or income. So yeah, I mean, that's usually what I'm always harping on about. It's like you when it comes to investing, you always got to start with, well, what is your goal, and then kind of move, you know, from there and kind of figure out what makes sense. You mentioned, and I kind of want to dig into this because I know this is kind of a bit different again, because I talk mainly about like index funds and then boring stuff like that. But you mentioned you do have some funds that use covered call options as a strategy to produce growth and income. A lot of buzzwords there. Can you kind of break that down a little bit so people can understand what does that mean? How does that work? And why would you use that as a strategy inside an ETF? Okay. Well, there's very few of

them in Canada. I mean, we have them, BMO has them, I think CI has them. I think we're the third largest provider of these types of products in Canada. And we've become quite good at managing that type of portfolio. So your underlying basis is to grow capital, which is why we'll use healthcare again, since we've been talking about it. We'll want to allocate capital to large cap US companies and global companies in the healthcare space. We don't have a lot of them here in Canada, so we look globally for those companies. So once we're positioned for that

growth, then we're going to take a portion of that portfolio, about between 20 and 30 percent, and we'll sell calls or under the term is write calls on a portion of that portfolio, which will generate income because we'll collect the premiums or the income from selling those positions while at the same time maintain 70, 80% of the portfolio long exposure, if you will, to the market. So that way we still have that growth component, but we're actually siphoning off a bit of the growth short term to generate that income. And luckily that income is treated as capital gains. So it's actually a better tax. If it's not an RRSP or a RRIF, it's a better way to

sort of collect that income. At least you're paying capital gains as opposed to pure interest income. So the option strategy itself, it's simple, but at the same time, it's fairly complex because there's a variety of different options. They have different prices on them. They have different time periods on them. They trade at different values. And we have a group of guys here that just spend all their time focusing on those options and trying to write, in some cases, 110, 120 contracts a month on a single fund to generate that income. So if our yield target is say 8% annually, they'll look at the fund that month, they'll say how much do we

have to write on top of the dividends that we're collecting to meet that income requirement. And that way we can keep the minimum amount of option writing going well, the maximum amount of market exposure. So it's sort of a balance, if you will, to generate that income and get some growth. Have I confused everything even more? No, no, it makes sense. But yeah, a lot to think about. It's, you know, the strategies, like I said, conceptually are simple, but when you sort of dig into the nitty gritty, there's a lot of moving parts there and a lot of work to be done.

As we say, a lot of brain damage that gets done every month to run these portfolios. But the results have been fantastic. Another thing I want to talk about that I was excited to talk to you about was your clean energy ETF, like you kind of mentioned. I personally believe this is the future and needs to be the future right i mean as time goes on i feel like um certainly the pandemic has shown how important we need to pay attention to um the world that we live in and and not just talk but actually do and i've been talking about this for a while just i mean i'd say in the the past five years i've been you been talking about this for a while. Just, I mean, I'd say in the past five years, I've been, you know, talking about responsible investing or being really focused on your personal values when you invest and being, you know, conscious of what companies that you're actually lending your money

to, because ultimately what it is, is you are promoting that company and saying that, yes, this is something that I am putting my money towards. And, you know, honestly, I'd say like, yeah, six or seven years ago, it was very difficult to be able to invest in any kind of thing like that. You just didn't have the options. Now there's a lot more products out there where, you know, it gets really specific. But even in the kind of responsible investing space with all the different ETFs and portfolios available, you know, sometimes you'll find a company and you're like, oh, well, everything was good except for that one company that I don't like that's in that fund.

So I'm curious, how did you develop that clean energy ETF? What was kind of the strategy? How did you kind of use some of the ESG guidelines to develop it? Yeah, well, in this strategy, it's definitely following the E, which is the environmental side more than anything. If I can step back, ESG, and we've been reading more about it, it's more complex than people think because there's no sort of standard guidelines. Different investment managers have their own way of approaching ESG. One's right or one's wrong, but it's not consistent.

And some companies sell a carbon or buy carbon credits to offset. And there's sort of arguments about whether that's the right thing to do or not. In setting up the clean energy file, we thought, well, we want to focus on one part of the industry that we see as great growth initiatives behind it, governments behind it, corporations are behind it. So let's focus on a part of the sector where the specific focus in this case is the environment. So that's wind power, solar power, hydro, biomass, all of these areas that are growing and developing. And they're costly, but as time goes on, the costs drop and the efficiencies get better. So that's what we're really trying to focus on for the long term with this fund.

So it's not an income fund. It doesn't generate monthly income like our other funds. It's really more focused on the growth component of the clean energy sector. But we just see that as a huge growth area into the future. Even looking at, I was reading yesterday 340 odd thousand windmills now exist out there and there's a lot of work and effort that goes into putting up a windmill right from the manufacturing the plastics the transportation and get those critics that say well you're burning so much energy to do that but once they're up and running the efficiencies from the power they're generating over the long term are fantastic. So you got a million of these things up eventually, that's going to be generating millions of

gigawatts of power and keeping cities lit up and much more efficient, much cleaner. So it's a process, but we, like you're saying, we believe it has to happen. It is happening. And now the political will is behind it with the Paris Accord, with the U.S. sort of getting back into the Paris Accord since Biden has come back in or is back in. And we just see that as even more sort of wins in the sales, if you will, that are going to keep pushing the clean energy markets forward. So we want to be invested in there, and we want to, as opposed to saying, trying to find the right balance of ESG, we're saying, well, we're just going to focus on E here, and what are the best companies to own,

and which companies are sort of making the most progress in the clean energy space. And that's even from, there's companies that manufacture devices that will actually turn solar panels so they capture more sun. There's all kinds of, let's just dig into this thing. There's all kinds of really interesting ideas that are going on out there. That's cool. Do you have any plans, you know, since that fund really focuses on the E, any plans to develop ETFs that focus more on the S and the G, the societal or the governance aspects?

Well, we're looking at how can we sort of have a standardized set of rules that sort of bring in the S and the regulator, but we need to see some sort of standardized body to say, this is what, these are the type of rules that we're looking at. These are the type of things companies should be going by, individuals should be going by. How do we incorporate that into our overall process? We did have an ESG bond fund. Unfortunately, it wasn't very successful. We decided to pull it. But we were working with a company at that time that was providing a lot of guidelines as to how do you monitor ESG. And that's when we realized, as you peel back the onion, there's more and more layers of this.

It's more and more difficult to sort of break down what should be the standard guidelines that we're looking at. And one example is you may have a company that's, say, has female board members, so therefore they're getting points for that, but at the same time they're dumping the fluid into a river. So, you know, how do you sort of morally look at that and say, well, this is an ESG rating of X, so therefore let's put it in the portfolio. So these are some of the questions that we're looking at right now, but the idea is, Jessica, we want to get more into that space, and we think it's

the future, and that's where it's going, and we want to participate not only with individual funds like the Green Fund, Clean Energy Fund, but with the overall ESG sort of top-down rating. So we're going to look at the greenwash portfolios. with an overall ESG sort of top-down rating. Yeah, I mean, hopefully it's not an issue. You know, it should be, every company should be following these guidelines, but I think it'll be a long time until we see all of that. Well, when it comes down to it,

the corporations have to be following in their daily management practices. Individuals, we have to be following it too in how we practice things. It's really, it boils all down to all of us sort of following these guidelines. And as investment managers, okay, we have to set up our criteria where we can sort of comfortably invest in companies

that everyone's sort of participating in and doing this right thing, if you will. Absolutely, absolutely. So kind of the last question I have for you, just because you, I mean, you were around when the first ETF was launched, which I think is pretty cool. And it has been such an interesting, I mean, evolution since that first ETF was launched to now. I mean, now you see so many different types of ETFs, you know, like the launch of the Bitcoin ETFs in Canada wasn't just a few months ago. And now the U.S US is launching things like that. I'm so curious what your kind of feelings

or perspective is seeing the evolution of the ETF, but also what are some of your predictions or thoughts about where we may see the evolution continue in the future? Well, you're right. ETFs really started as index products. And it was, if anything, it was an S&P 500 or an S&P 100 or a TSX 60. They were really sort of pieces of the market that were being indexed together and a little fee being charged and put on the market.

So a lot of portfolio managers at the time or advisors were simply positioned, oh, I want to have a position in the S&P, so I want to buy that ETF. What that did, actually, it sort of worked against the ETF industry for a while because a lot of people thought, well, I don't want to buy an index. I'm going to do my own stock picking. And it took a long time for it to sort of develop because it went from sort of really small to sort of taken off in the last 10 years. Now you've got, even when we launched our ETF company, which was only five years ago,

a lot of our advisors and people we'd go and talk to say, well, I don't want to buy an index. They go, well, we're not an index. I mean, look at what we're doing here. This is active. This is income. This is an option strategy. And I think advisors and individuals had to get their

head around the idea that these are really diverse investment products that cover everything from a 10 basis point index to a 70 or 80 basis point option writing strategy. So I think it's actually become a really interesting industry. And I think it'll continue to develop with things like Bitcoin ETFs, more ESG ETFs, more option writing ETFs. If anything, it'll probably continue to grow like the mutual fund industry did for so many years until it starts to not grow and consolidate, if you will. But that might be a few years away. So I think it'll continue to innovate and will continue to grow with different types of products as we go forward. I'm curious now, too, since back in the 80s, mutual funds were the thing. And even when I first started investing in my 20s a decade ago, mutual funds were the thing.

I didn't even know ETFs existed. They were not popular at all, at least to the mainstream. Do you see just the mutual fund industry kind of being maybe usurped by the ETF industry? Do you think there's still a place for the mutual funds? Or do you think they're just not as, I don't know. In my view, I'm like, I've just basically talked about ETFs. I don't know if I see personally a place for mutual funds anymore, but I could just be biased because I like what I like. Well, in Canada, it's a $2 trillion industry, the mutual fund business. In the United States, I think it was $21.5 trillion.

So these are huge industries that were built over decades. I think they'll be relevant for a long time. I don't think they're going away. But I think as your generation gets older, they're saying, well, I want to move more to market traded, lower priced, more flexible options. I think the mutual fund business is changing. Their commission structures have changed. They are starting to bring down more and more of their fee structures. I think they have to change because they've got so much in assets. But I don't think it's going away.

Let me just put it that way. I think the ETF industry will continue to grow faster than the mutual fund industry. I don't see mutual funds as really a growth industry anymore. It was for a few decades. But now the ETFs have definitely taken over and are growing at a much faster pace. Yeah, yeah. It'll be interesting to see what happens. It's even interesting just, yeah, me having the perspective from, you know, when I first started, which was around, like, I started learning about this stuff around 2009, 2010 to now being in 2021.

Just how much, just the, how much the investing industry in and of itself has changed. I mean, you know, now it's so much more accessible to be like a DIY investor to build your own portfolio. Back in the day, it was very difficult to figure out how on earth to actually do that. So I'm interested to see what's going to happen. What are your kind of thoughts? Well, you're absolutely right. The interesting thing is when I started in the business, people didn't even want to buy mutual funds.

Mutual funds got really popular late 80s going into the 90s. But also, I think the industry is so much better today than it was when I started because you had to go, in my case, work for a brokerage, one of the main brokerage firms. You were charging in to get in and to get out of transactions. It was very costly. You needed a lot of money to sort of work at it. And now you could go to organizations, start with $100 a month, start building it up, have little to no fee structures. And I just think for the individual, there's way more education because of technology. There's better pricing, better entry points.

I just think it's a much better industry. And I hope it continues to grow in this way that it has because it's certainly, I think, more beneficial for society. Yeah. And people have to take care of their finances and they have to plan for the future. And it's like we needed to make that more accessible and just simple. I mean, I think that's the biggest barrier that I hear from people is, I mean, not as much anymore, but yeah, definitely, again, going back like a decade, it was difficult.

Like if you wanted to buy like an index fund, I'm like, how do you even do that? And there's like, oh, there's like two different ways. Like it was very difficult. And now it's like, oh, well, you can open up this account with a robo advisor or you can open up a discount brokerage and just start doing it today. Whereas, you know, before you had to like set up a meeting with someone and have a call, you know, all these kinds of things. So. Exactly. Go into big intimidating offices and sit down and go through it all. I remember I opened my first account when I was 19 and I went down to this office on Bay Street and I had no idea what I was doing. And I was just

looking at their research reports and they were charging me all kinds of fees to invest very little money at the time. But as I said, I think it's a much better industry today and there's far more options. And I have kids in their 20s now, and I can't believe the stuff they're doing, what they can access. And I think it's wonderful. Yeah. Well, I'm sure they get a lot of great advice from you. It must be nice to have you as someone in the background to kind of, hey, have you thought about this? They don't always listen to me, but I do my best. Well, it's been such a pleasure having you on the show. And yeah, hopefully this encourages more people to take that opportunity to learn something that they didn't learn. And I think kind of just to end kind of what we're touching on at the end is because it is so much more accessible to start investing,

then there really isn't much of an excuse. And not just like to start investing, but also to learn what you don't know. Again, there was like a handful of books, but nothing online that you can really learn a decade ago. And now there's I mean, there's this podcast, and there's so many resources. So there's no excuse not to get started right away. Because as we both know, the sooner you start, I mean, you started when you were 19. I wish I started when I was 19. If I can go back in time, I would start investing earlier. And so the importance of starting as soon as possible is so, so important. It absolutely is. And I can say to your listeners, especially if you're young and starting out, stick with equities for the long term, because, you know, bonds will move up and

down with interest rates and markets will go up and down as well for all kinds of reasons. And there'll be more crises in the future, whatever they may be. But stick with quality, stick for the long term and get that compound growth happening. Defer taxes as long as you can, because taxes, you know, hurt wealth. And grow that capital and stick with it. Just stick with it. That's basically, yeah. I think that's the, again, it's like the psychological barriers or the other, or the hardest things as an investor is just getting over your own emotions and neuroses and, you know, panic. But, yeah, like you kind of mentioned at the beginning of this episode, you know, we've seen market crashes, corrections. We're going to see more in the future.

We don't know when they're going to happen. But if you're just a long-term investor, which, you know, I feel like that's the best way to invest, it's all going to come out, you know, good in the end. So just stick with it. Yeah. And they always feel like it's the end of the world when you're in the middle of the crash.

Oh my gosh. Literally, that's exactly what it felt like last time. I've been through a few now. Yeah. It's not the end of the world. Don't, you know, it's not the end of the world, guys.

So thank you so much for taking the time to be on the show. It was a pleasure having you. Oh, thank you for having me. I appreciate it, Jessica. And that was episode 304 with Michael Kovacs of Harvest Portfolios. You can find more information about, you know, lots of the things that we talked about,

the specific ETFs that Harvest offers, and also some of the free resources that Harvest also provides at harvestetfs.com. You can follow them on Twitter at Harvest ETFs and also on Instagram at Harvest ETFs. And like I mentioned, you know, they've got a ton of free resources, some really great in-depth blog posts. They also have a monthly newsletter and a product interactive booklet. But also what I love as a podcaster is they also have a podcast. It's called Harvest Talks Podcast. You can find it on any podcast platform, but you can

also just find it at harvestportfolios.com slash podcasts. So that is it for me for this week. Thanks so much for joining me for this special bonus episode. I hope you enjoyed it. I will of course be back next Wednesday for a fresh new episode of the podcast. If you're curious, what is it going to be on? Well, actually very exciting. It is a episode that I did in person. I like actually had a real life person, the guest at my house to do the interview. I have not done an in-person interview. Goodness. Years. It's been absolute years. Literally, even years before the pandemic. I just I do everything pretty much virtually because it just makes more sense. But in this case, it actually made more sense for her just to come over. And so you'll have to find out.

I'll just tell you who it is. I have Ardell Harrison on the show. We do a deep dive about first managing your money. If you're single, I get a lot of questions about what does it mean to, you know, single finances? Like, is it possible for me to achieve some of these things like owning property or investing in real estate or retiring early if I'm single. And while she is a testament to that, because yes, she was able to do all of them. And so she shares her journey and also she has a book. So I will be giving away a copy of her book next week as well. So, uh, that is it for me. Thank you so much for listening. A big shout out to my podcast editor, Matt Rideout. I will see you back here next Wednesday. See you then.

This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.