Horizons Medical Marijuana Life Sciences ETF
Why should an investor consider investing in a cannabis ETF?
The key benefit is diversification. The cannabis industry as a regulated entity is still very much in its infancy, and like any rapidly growing early-stage industry will have some growing pains. Some of the stocks in the sector are likely going to do quite well, while others may perform poorly. If you’re picking individual stocks, you’re taking on issuer and concentration risk. Where the sector overall might be doing well, you could run the risk of buying one of those stocks that has unforeseen problems down the road.
A sector ETF like HMMJ diversifies this risk, so that you’re getting the aggregate net performance of the sector without taking on too much of that potential individual stock risk.
HMMJ is also a liquid security that can be bought or sold throughout the business day. Instead of having to buy 10 to 20 different stocks and navigate their individual liquidity,
HMMJ packages all of that exposure in one security. Overall, this reduces trading costs.
Why would investors want to buy a Canadian-listed Marijuana ETF?
Right now, the regulatory environment in Canada is cultivating (no pun intended) a very robust marijuana industry since medical marijuana usage is federally legal in this country. In addition, proposed legislation in Canada (expected to pass in 2018) will also make recreational marijuana legal. We expect our medical marijuana producers, which are regulated by Health Canada, are going to have a big leg-up on other international jurisdictions because they have been doing this longer under a federally regulated process.
There is also a big question surrounding whether a U.S.-listed ETF will even get listed for trading and what it will invest in. HMMJ buys many of the Canadian producers, which we believe are really at the core of the growth of the medical marijuana industry. We can only speculate if a U.S.-listed ETF will or will
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