This article was originally published on ETFTrends.com.
The AdvisorShares Pure Cannabis ETF (Ticker:Ticker::YOLO) began trading on Thursday, which makes it the first active exchange-traded fund (ETF) domiciled in the United States to deliver dedicated, fully-invested cannabis exposure.
Because of its active management component, YOLO can perform the necessary adjustments to its portfolio in quicker order versus a passive index-based strategy. According to AdvisorShares, this is of particular benefit given that the cannabis marketplace rapidly evolves, which can make way for a number of market fluctuations that can occur with investing in this niche space.
YOLO seeks long-term capital appreciation by investing in both domestic and foreign cannabis equity securities. This active ETF allocates across a universe of primarily U.S. and Canadian cannabis companies engaging in legal business which span different industries, including those specializing in consumer products. YOLO's portfolio management team carries deep experience in the capital markets and a well-established expertise of investing in highly-regulated areas of the markets including cannabis.
"We feel cannabis stands poised to become a market disruptor and long-term emerging growth opportunity, especially as societal, business and regulatory landscapes evolve," said Dan Ahrens, managing director of AdvisorShares and portfolio manager of YOLO. "We believe YOLO may provide a compelling case to investors seeking emerging growth and dedicated cannabis exposure for their portfolios."
Per the AdvisorShares site, the fund will provide prospective investors with:
The announcement comes as another marijuana ETF, ETFMG Alternative Harvest ETF (MJ), is having a stellar year thus far with a 46.30 year-to-date gain. One of its top three holdings, Canopy Growth, recently announced on Thursday that it was acquiring cannabis cultivation company Acreage Holdings in a $3.4 billion deal.
The deal is another win for the cannabis industry, but though a number of states have already given marijuana use the thumbs up for recreational or medical use, depending on the state, it is still prohibited by federal law. The Food and Drug Administration, in particular, prohibits the use of cannabis in consumer items like food and drinks.
Another obstacle is listing on exchanges. Some exchanges prohibit the listing of companies that engage in business activities they deem questionable.
“Until now, the Nasdaq has not been willing to list companies that have U.S. ‘plant touching’ cannabis operations,†said cannabis lawyer David Feldman, a partner at Duane Morris. “What’s interesting is that they didn’t tie this to Nasdaq, they tied it to legalization.â€
“It is interesting that they are limiting it to legalization, rather than completing the acquisition when TSX and Nasdaq are prepared to allow the listing,†Feldman added.
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