Investors may soon be able to get passive and active ETF-based exposure to the US space
Two Canadian ETF firms have filed prospectuses to launch new pot ETFs focused on companies involved in the US marijuana industry.
In an apparent bid to bolster a reputation for providing variety in pot investment, Horizons ETFs is has filed a preliminary prospectus for a marijuana ETF that’s focused on the US market.
According to the prospectus, the Horizons US Marijuana Index ETF seeks to replicate, to the extent possible, the performance of the Horizons US Marijuana Companies Index, net of expenses. The market-cap weighted index is designed to provide exposure to the performance of a basket of North American publicly listed life sciences companies that have significant business activities in, or significant exposure to, the US marijuana or hemp industries.
“Constituents of the Underlying Index are selected from regulated North American senior and junior exchanges,” the prospectus said. “While some securities may be listed on major North American exchanges, many of these securities may trade on North American junior exchanges that include but are not limited to the TSX Venture Exchange, the Canadian Securities Exchange and the Nasdaq Capital Market.”
The ETF will be offered in both US-dollar and Canadian-dollar units, with prospective ticker symbols of HMUS.U and HMUS. Holders of US-dollar units or Canadian-dollar units of the ETF may request for redemption proceeds to be paid in either US or Canadian currency.
“The ETF will not seek to hedge any currency exposure, and Cdn$ units of the ETF will not hedge U.S. dollar currency exposure to the Canadian dollar,” the prospectus said.
Meanwhile, Evolve Funds has also announced its filing of a preliminary prospectus for Canada’s first actively managed US marijuana industry-focused ETF.
“The U.S. Marijuana ETF (‘USMJ’) is designed to provide investors with long-term capital appreciation by actively investing in a diversified mix of equity securities of public issuers that are involved in the U.S. marijuana industry where state and local laws regulate and permit such activities,” Evolve said in a statement.
According to the firm, USMJ may invest in equity securities issued by domestically and globally listed companies that have business activities in the US recreational and/or medical marijuana industry. It complements Evolve’s first active pot ETF, SEED, which the firm reported was Canada’s top performer out of 504 TSX-listed equity ETFs with a one-year return of 48.48% as of February 28.
“The U.S. marijuana market is poised to become the largest in the world as recreational and medical cannabis becomes legal at state levels," said Elliot Johnson, chief investment officer at Evolve ETFs and Portfolio Manager for SEED. "The US growth opportunity in cannabis is similar to the ground floor in Canada over a year ago.”
