NYSE Gets New Cannabis ETF with Unique Characteristics
July 8, 2019
The New York Stock Exchange is getting a new cannabis-focused ETF: The Cannabis ETF (NYSE:THCX).
With a name as great as its ticker, The Cannabis ETF will focus on companies in the legal marijuana, CBD, and hemp industries. This passively managed pure-play ETF was launched by Innovation Shares, a sponsor of unique thematic exchange traded funds, and will trade on the NYSE Arca, formerly known as ArcaEx.
Rebalancing will take place on a monthly basis, unlike many other ETFs, which rebalance quarterly.
This is the first passively managed cannabis-related ETF to trade on the NYSE with no exposure to tobacco or alcohol stocks, claims Matt Markiewicz, Managing Director of Innovation Shares.
“Rebalancing on a monthly basis not only allows the fund to take advantage of a constantly evolving cannabis capital markets environment but should help smooth out some of the longer term volatility that is often associated with a burgeoning industry. This is a chance for serious investors who recognize the potential of a generational investment opportunity but have wavered on buying specific stocks,” added Matt Markiewicz in an exclusive email.
The index reflected by the ETF includes 35 stocks that the firm expects will “benefit from the rise in value of the global cannabis market, which is estimated to reach $630 billion by 2040.”
Available at a 70 bps management fee this is the lowest cost US-listed cannabis ETF. It should be noted, however, there are only two other cannabis-focused ETF trading on major a U.S. stock exchange: The ETFMG Alternative Harvest ETF (NYSE:MJ), which has a 0.75 percent management fee, and The AdvisorShares Pure Cannabis ETF (NYSE:YOLO), which boasts a net expense ratio of 0.74 percent.
It’s also important to note that, while lower than those of other U.S.-listed cannabis ETFs, the fund’s fees are still higher than the average. According to the Wall Street Journal, “The average ETF carries an expense ratio of 0.44%, which means the fund will cost you $4.40 in annual fees for every $1,000 you invest.”
Big Stocks, Big Bets
According to Markiewicz, The Cannabis ETF currently includes shares from Canopy Growth, Aurora, Cronos Group, Tilray, Hexo Corp, Greenlane Holdings, Charlotte’s Web Holdings, GW Pharmaceuticals, and others.
“With several regulatory catalysts on the horizon in the U.S. and abroad, the current cannabis environment presents an exciting opportunity for investors. One area which has witnessed explosive growth since the signing of last year’s U.S. Farm Bill is the hemp-derived CBD industry. Several of the companies in the portfolio are actively participating in this CBD boom by cultivating hemp, providing extraction services or by using CBD for applications in the pharmaceutical, health and consumer wellness markets,” Markiewicz concluded.
Read the original Forbes article here.