Marijuana ETF Joins Billion Dollar Club
ETFMG Alternative Harvest ETF MJ — the first
and only pure ETF targeting the cannabis/marijuana industry — has
been surging on easing rules and regulations on the once highly
guarded drug, marijuana, for recreational and medical usage. The
fund has now accumulated billion dollars in AUM since its inception
in less than 14 months (read: ETF Investing 2019: Best Ideas &
Trends).
Inside The Popularity
The popularity is rising since Canada has legalized recreational
cannabis and become the second country in the world to do so on a
national level.
Additionally, a number of states in United States also joined the
race of marijuana legalization. Congress, the White House and U.S.
regulators have also softened their stance on the drug’s
legalization. Michigan became the 10th state to legalize
recreational cannabis use while Utah and Missouri became the 31st
and 32nd states, respectively, to legalize marijuana for medical
use. Recreational marijuana is expected to be legal soon for adults
over the age of 21 years in New York, while the European nation of
Luxembourg in late November also announced that marijuana would
soon be legalized for recreational use by adult residents.
Further, the FDA approved the first non-synthetic cannabis derived
medicine, EPIDIOLEX, used to treat rare forms of childhood epilepsy
and Trump passed the Farm bill legalizing cannabis products derived
from hemp in America, including products containing cannabidiol
(CBD). All these developments have injected strong optimism into
the emerging marijuana industry.
The tremendous success of the pot industry is showing no sign of
slowdown as a number of alcoholic beverage companies are producing
huge opportunities by investing or partnering with cannabis
producers (read: Pot Stocks are on a High: Play These Marijuana
ETFs).
Per an analyst at Cowen, the U.S. legal cannabis industry is
expected to reach $80 billion in sales by 2030, surpassing the
carbonated soft drink market in 2017. An analyst at Haywood
Securities foresees exponential growth in cannabis stocks with the
U.S. cannabis market expected to be worth between $15.9 million and
$21.7 billion by the year 2022.
MJ in Focus
It tracks the Prime Alternative Harvest Index, designed to measure
the performance of companies within the cannabis ecosystem,
benefiting from global medicinal and recreational cannabis
legalization initiatives. The fund holds 38 securities in its
basket with higher concentration on the top firm — Cronos Group
Inc. CRON — with 18.6% allocation. Canopy Growth CGC and Aurora
Cannabis ACB take the next two spots with 8.7% and 7.7%,
respectively, while other firms hold no more than 5.61% of assets
(read: 5 Top Performing Stocks of Marijuana ETF).
Cronos has surged 121% so far this year buoyed by the M&A news
involving tobacco giant Altria MO. Canopy Growth has gained 85%
while Aurora Cannabis is up 62% so far this year.
Canadian firms make up 61.9% of the portfolio, while American firms
comprise 24.2%. The ETF trades in a solid average daily volume of
around 940,000 shares and charges 75 bps in annual fees. The
marijuana ETF has soared 38.9% so far this year (read: What Makes
Marijuana ETF the Best Performer in January?).
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ETFMG Alternative Harvest ETF (MJ): ETF Research Reports
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