In a year affected by the impact of the coronavirus, cannabis stocks haven’t escaped the volatility of the market and this has affected the performance of ETFs in the public space.
ETFs offer a basket of stocks as an investment vehicle for investors who may be hesitant to pick individual names. ETF companies have made their case in cannabis by promoting the reassurance of having experts in such a relatively new investment market.
Cannabis ETFs have picked up in popularity and availability as a way for investors to gain exposure into the volatile sector. While these funds still see periods of change depending on the state of the industry some have added active management as a way to stay ahead of the flippant state of cannabis investments.
Cannabis experts and market analysts offered valuable insight and 2020 forecasts for the quickly evolving cannabis sector
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Here the Investing News Network (INN) takes a closer look at how exactly the most relevant cannabis ETFs available have performed in 2020 so far.
The following Canadian funds were selected by having net assets of over US$10 million and percentage changes were calculated up until July 31.
1. Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ)
The one that started it all in Canada, HMMJ still serves as an industry bearer for the biggest cannabis names in the sector. Since its launch Horizons has expanded its cannabis ETF portfolio with new additions covering additional geographies.
The biggest holdings in the fund are Canopy Growth (NYSE:CGC,TSX:WEED), GW Pharmaceuticals (NASDAQ:GWPH) and Cronos Group (NASDAQ:CRON,TSX:CRON).
Over a year-to-date time period, the index has decreased significantly as cannabis continues to take its lumps. The fund has gone down in value 17.27 percent for a price of C$7.09.
“Whenever you’re dealing with an early stage industry, like the global cannabis market, you’re going to have a high degree of failure and what you’re hoping to do is capture in some way, shape or form the successful companies that are going to be the leaders of the sector,” Mark Noble, senior vice president of ETF strategy with Horizons ETFs previously told INN.
2. ETFMG Alternative Harvest ETF (ARCA:MJ)
MJ abides to the rules of cannabis in the US, meaning no active US cannabis companies will be included, until some of kind of reform is seen in the country. “Even in those states in which the use of marijuana has been legalized, its possession and use remains a violation of federal law,” the fund’s documents indicate.
This fund utilizes the Prime Alternative Harvest Index as its tracking measurement. The largest names based on weight in the fund, available in MJ are the same as HMMJ: GW, Cronos and Canopy.
So far this year, the fund has decreased in value by 23.43 percent. The losses were extended by a sharp decline around February and March, as the coronavirus pandemic began to really impact the performance of the global markets.
At the end of July the ETF ran at a value of US$12.94 per share.
3. Amplify Seymour Cannabis ETF (ARCA:CNBS)
The launch of this ETF attracted a lot of attention based on the involvement of Tim Seymour, CIO of Seymour Asset Management and CNBC’s Fast Money co-host. “An active approach is the only way to invest in a sector like this that’s changing by the day,” Seymour previously said.
The fund itself touts the advantage of having Seymour contribute to the management and direction of the ETF, counting with his investment expertise and personal investment involvement in the sector may entice some investors to take a closer look.
Despite the challenges to the investment year, CNBS has seen a marginally less intense loss decline this year. Over a year-to-date period the ETF has decreased in value by 9.91 percent, resulting in a price of US$11.91.
CNBS holds the same top holdings as the previous ETFs in the list, highlighting the similarity in stocks between cannabis funds at the moment.
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4. AdvisorShares Pure Cannabis ETF (ARCA:YOLO)
This fund had the distinction of launching as one of the first actively managed ETFs in the cannabis space. The advantage of having an active manager in charge of the fund, despite the 0.60 percent fee, is counting with an observer of the market following the day-to-day performance of the fund and making any necessary or possible adjustments.
Dan Ahrens, managing director with AdvisorShares acts as the manager of this fund. The top holdings for YOLO are Village Farms International (NASDAQ:VFF,TSX:VFF), Innovative Industrial Properties (NYSE:IIPR) and GW.
This fund has also seen a difficult performing year in 2020, however its decline has been only of 3.03 percent and in fact it is inching closer to its highest price point of the year. At the end of July the fund was priced at US$11.54.
Similarly to its US-based counterparts this ETF does not offer exposure to any actively operated US cannabis companies conducting business in legal state markets.
5. The Cannabis ETF (ARCA:THCX)
The Cannabis ETF was part of the collective of rush of new cannabis ETFs launched in 2019. This fund also offers exposure to global cannabis corporations and stays away from any company touching the plant in the US.
This fund’s top holdings includes an all Canadian company lineup of Cronos, Aphria (NYSE:APHA,TSX:APHA) and Canopy Growth.
As far its performance so far in 2020, the fund has dropped in value significantly by 18.32 percent and at the end of July it held a price of US$10.21.
6. Cambria Cannabis ETF (CBOE:TOKE)
ETF provider Cambria Investment Management, launched this fund as a way to gain entry into the cannabis investment arena investing in between 20 and 50 of the biggest companies available.
TOKE acts as an actively managed fund, led by Mebane T. Faber, which costs investors a 0.59 percent management fee. It’s top holdings are GW, Aphria and Scotts Miracle-Gro (NYSE:SMG).
TOKE has struggled in 2020 as the fund dropped 16.38 percent in value by the end of July, ending with a price of US$12.71. As of June 30, since the original launch of the ETF, TOKE had dropped by 48.18 percent.
INNdepth
Want more details? Check out these articles for more INNdepth coverage.
Want an overview of investing in cannabis stocks? Check Investing in the Cannabis Industry
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Find out what experts say about profiting from the cannabis market in 2020!
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