Here are several top marijuana ETFs for investors to consider.
Exchange-traded funds are a great way to diversify an investment portfolio, especially when it comes to extremely volatile industries like the marijuana business. The past year has been difficult for cannabis investors. The Biden administration hasn’t made much meaningful progress on U.S. federal cannabis reform, even with Democrats controlling both sides of Congress. It may still be a long road to federal marijuana legalization, which is one reason why investors should minimize risk by taking a cautious, diversified approach to cannabis. Here are seven top marijuana ETFs for cannabis investors to consider.
AdvisorShares Pure U.S. Cannabis ETF (ticker: MSOS)
The MSOS fund is the largest and most liquid cannabis ETF, with $930 million in assets under management, or AUM, and an average daily trading volume of 1.3 million shares. The fund was the first U.S.-listed, actively managed cannabis ETF to provide exposure exclusively to American cannabis companies, including multistate operators, or MSOs. The AdvisorShares fund is a great option for investors looking to avoid struggling Canadian cannabis stocks. The fund has a 0.73% expense ratio, meaning you’ll pay $73 for every $10,000 annually, and only 35 stock holdings. Top holdings include Innovative Industrial Properties Inc. (IIPR), Verano Holdings Corp. (VRNO) and GrowGeneration Corp. (GRWG)
ETFMG Alternative Harvest ETF (MJ)
The MJ ETF was launched way back in 2015 and was the first pure-play cannabis ETF to trade on a major U.S. exchange. The MJ fund focuses on cannabis stocks listed on the New York Stock Exchange or Nasdaq, which means its top holdings do not include U.S. MSOs. The MJ fund has $655 million in assets under management and plenty of liquidity at an average daily trading volume of 1.3 million shares. The fund has an expense ratio of 0.75%. Top holdings include Tilray Brands Inc. (TLRY), Canopy Growth Corp. (CGC) and Sundial Growers Inc. (SNDL).
AdvisorShares Pure Cannabis ETF (YOLO)
The YOLO fund invests primarily in companies that derive at least 50% of their revenue from cannabis. The fund has a health care sector tilt, with at least 25% of assets invested in pharmaceutical, biotechnology and life sciences stocks. The YOLO fund has a 0.76% expense ratio, $133 million in assets and an average daily trading volume of more than 70,000 shares. Top holdings include greenhouse facilities management company Village Farms International Inc. (VFF) and medical cannabis real estate investment trust Innovative Industrial Properties Inc. (IIPR).
Global X Cannabis ETF (POTX)
The POTX ETF includes companies that have at least half of their revenue, earnings or assets devoted to the production and distribution of cannabis, cannabis industry financial services or cannabis-related pharmaceutical applications. It also includes pre-revenue companies that are expected to meet these criteria in the future. The POTX fund has $83 million in assets under management and an average daily trading volume of around 202,000 shares. Its expense ratio is 0.5%, making it a bit cheaper to own than the three largest marijuana ETFs. Top holdings include Sundial Growers, Tilray and OrganiGram Holdings Inc. (OGI).
Amplify Seymour Cannabis ETF (CNBS)
The CNBS fund invests 80% of its assets in companies that generate at least half their revenue from cannabis sales. The fund is actively managed by popular CNBC personality and cannabis expert Tim Seymour. The CNBS fund is highly diversified with 31 holdings, which vary by market cap, industry and business focus to mitigate risk. The fund has $69 million in AUM and a 0.75% expense ratio. Unfortunately, the CNBC fund has relatively low liquidity, averaging about 55,000 shares in daily trading volume. Top holdings include WM Technology Inc. (MAPS), Tilray and Village Farms International.
The Cannabis ETF (THCX)
The THCX ETF tracks the Innovation Labs Cannabis Index. THCX was launched in 2019 and holds a diversified basket of 30 cannabis stocks. It has a $56 million AUM and average daily trading volume of more than 53,000 shares. Unlike other cannabis ETFs, the THCX fund is passively managed and it rebalances on a monthly, rather than quarterly, basis. Unfortunately, that passive management doesn’t come with lower management fees. The THCX fund has a 0.75% expense ratio, inline with most other top cannabis funds. Top holdings include Tilray, Fire & Flower Holdings Corp. (FAF) and Cronos Group Inc. (CRON).
Cambria Cannabis ETF (TOKE)
The TOKE ETF is one way for risk-tolerant cannabis investors to minimize their fund management fees. The TOKE fund holds a basket of 30 stocks that are exposed to cannabis. However, many of its top holdings aren’t cannabis pure-plays, such as alcohol giant Constellation Brands Inc. (STZ) and tobacco companies British American Tobacco PLC (BTI) and Altria Group Inc. (MO). Investors betting on the TOKE fund should understand the risks involved with the fund’s relatively small $22 million in AUM and just 9,000 shares of daily trading volume. However, the fund’s expense ratio is only 0.42%, which is the lowest on this list.
7 best marijuana ETFs to buy in 2022:
— AdvisorShares Pure U.S. Cannabis ETF (MSOS)
— ETFMG Alternative Harvest ETF (MJ)
— AdvisorShares Pure Cannabis ETF (YOLO)
— Global X Cannabis ETF (POTX)
— Amplify Seymour Cannabis ETF (CNBS)
— The Cannabis ETF (THCX)
— Cambria Cannabis ETF (TOKE)
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7 Best Marijuana ETFs to Buy in 2022 originally appeared on usnews.com
