You’re reading a copy of this week’s edition of the New Cannabis Ventures weekly newsletter, which we have been publishing since October 2015.
We recently shared a review of these funds with subscribers to our premium cannabis due diligence service 420 Investor, concluding that there has been a substantial evolution over the past four years, though few of the ETFs have been able to scale.
Finally, while the ETF should appeal to certain investors unable to invest directly in its holdings, the concentration is quite high, with the top 5 names currently representing 58% of the holdings and the top 10 totaling almost 84%.
The performance in 2021 and 2022 is better than other ETFs, but this is because the ETF has substantial exposure to non-cannabis names, including several tobacco companies.
For Canadian investors, this ETF may be of appeal, but most American investors would be better served to invest directly in the few securities held or to choose another ETF.
YOLO, which has a 35% stake in MSOS, also owns several of the components in its sister ETF, leaving it with outsized exposure to one name in particular.
From our perspective, this is perhaps the best ETF for investors who want broad exposure to the market and who appreciate active management.
THCX, which has no stated benchmark, is perhaps the best diversified ETF , but there is no exposure to American operators.
Today, investors have a lot of options to gain exposure to various parts of the market, and a couple of ETFs are broadly diversified across all parts of the market.
In our view, most of these ETFs have tended to be too concentrated in the very largest names, which, in our view, makes it easy for investors to just buy these securities themselves.
ETFs certainly serve a purpose, allowing investors to participate in the cannabis theme without having to pick stocks.
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