There’s good news for investors who worry about whether they can pick good individual cannabis stocks. They now have more choices than ever for cannabis ETFs.
Here’s a rundown of two new legal-weed ETFs and three older options to choose from:
The Cannabis ETF
The latest entry into the arena is The Cannabis ETF, which Innovation Shares is launching next week on the New York Stock Exchange under the ticker symbol THCX.
THCX will track the Innovation Labs Cannabis Index and will be rebalanced and reconstituted monthly. The fund will initially hold some 35 cannabis stocks, each with a minimum $100 million market cap. The top five holdings at launch will include Tilray (TLRY) , Cronos Group (CRON) , Canopy Growth (CGC) , GW Pharmaceuticals (GWPH) and Aurora Cannabis (ACB) .
“We are excited to bring THCX — a pure-play cannabis ETF — to the market,” said Matt Markiewicz, managing director of Innovation shares. “Investors have been asking for a low-cost diversified solution that is able to capture the full growth potential of the cannabis industry without exposure to tobacco stocks, and we expect THCX to exceed those expectations.”
CNBC’s Jon Najarian is an adviser to the fund, while Cowen will serve as the custodial firm behind it.
The AdvisorShares Pure Cannabis ETF
This actively managed ETF invests in cannabis-related plays that get at least 50% of their net revenue from marijuana or hemp. It doesn’t track any underlying index, but focuses on mid- and small-cap companies (<$600 million market capitalization).
At least 25% of the fund’s investments go to cannabis companies in the pharmaceutical, biotech and life-science spaces. The company says YOLO “is designed to fully invest for pure cannabis exposure under the guidance of a deeply experienced portfolio-management team navigating the emerging cannabis marketplace.”
There were some 30 stocks in the ETF as of last check. Some 77% of the firms are based in Canada, with about 22% in the United States. YOLO’s top-five holdings as of June 27 were Innovative Industrial Properties (IIPR) , Aphria (APHA) , OrganiGram Holdings (OGI) , CannTrust (CTST) and Hexo (HEXO) .
The AdvisorShares Vice ETF
AdvisorShares also runs the actively managed AdvisorShares Vice ETF (ACT) , which has $13 million in assets under management that it invests in not just cannabis stocks, but also in tobacco and alcohol companies.
In fact, only 26% of this ETF is in cannabis stocks. Another 25% is in alcohol plays, while 13% is in tobacco stocks. ACT also invests in alcohol and tobacco firms that have some cannabis exposure. The fund launched in 2017.
Evolve Actively Managed Marijuana ETF
The Evolve Actively Managed Marijuana ETF uses the symbol SEED on the Toronto Stock Exchange.
Parent company The Evolve Funds Group describes SEED as offering a “diversified mix of equity securities of issuers involved in the marijuana industry.” The ETF currently owns stocks of some 30 companies, including top five holdings Aurora Cannabis, Canopy Growth, OrganiGram Holdings, Hexo and Charlotte’s Web Holdings (CWBHF) .
SEED listed in 2018 and is priced in Canadian dollars. Some 80% of the companies held are Canadian, while 16% are U.S. based, 2% are in Britain and the remaining 2% are headquartered in other countries.
Alternative Harvest ETF
One of the “big kahunas” of this space is the Alternative Harvest ETF (MJ) , which was the first marijuana-related ETF to trade in the United States.
The fund tracks the Prime Alternative Harvest Index and has more than $1 billion in assets under management. However, MJ isn’t a pure cannabis play because it also holds some tobacco stocks.
All told the fund currently holds nearly 40 names and is rebalanced quarterly. Its top five holdings include GW Pharmaceuticals, Cronos Group, Tilray, Aurora Cannabis and Canopy Growth.
Some 49% of MJ’s stocks are based in Canada, with 32% in the United States, 12% in the United Kingdom and the rest from Sweden, Italy and Japan. Small- to mid-cap companies make up 68% of the ETF, while large-caps (more than $12 billion in assets under management) account for 17% and micro-caps (stocks worth less than $600 million) cover 12%.