Serious investors who are looking to diversify their stock holdings have been turning their eyes toward the cannabis sector recently. Two Canadian companies who have thrown their hats into the ring with their own ETFs in mind show promise for investors in future months. These companies are offering investment strategies that differ from the ones currently existing on the market.
Some of the highlights that have investors excited about these ETFs are:
● A small-cap focus
● Limited float
● Concentrated purchasing techniques that could cause a temporarily raise in inflation
The two ETFs, both of which were recently filed to be listed, are Evolve and Horizon. Both are Canadian companies with a distinct focus on cannabis. Horizon intends to launch a Junior Cannabis Growers Index ETF that will provide an added emphasis to cannabis growers and processors.
Evolve is planning to bring forth the Cannabis ETF, the world’s first globally-mandated cannabis ETF. This ETF is aimed at Canadian investors that wish to invest in a very diverse selection of equity securities that have to do with the blossoming legal cannabis trade. As cannabis legalization becomes more widely spread, Evolve plans to reach out to the international cannabis industry.
A third company called SEED is expected, based upon the filings, to invest in a series of both domestic and international companies in both the recreational and medicinal cannabis industries. Evolve will be acting as the promoter, portfolio manager and trustee of SEED. They will also have the option to invest as much as ten percent of the fund into private companies.
New ETFs add buying power to the market, which is sure to please investors who wish to raise the visibility of the ever-expanding cannabis sector. However, it is important to realize that these ETFs might not be suitable for every person’s portfolio.
● The prices of shares are currently unknown, as the ETFs will not begin trading until a few weeks after acceptance.
● Because the cannabis industry can be quite unpredictable, it is not advisable to invest in these ETFs solely for the purpose of getting in on the ground floor.
● The share price of the companies in these EFTs depends on their weight in the fund. Smaller caps will have less weight, for example.
This new and exciting opportunity could certainly be a brilliant way to diversify one’s portfolio and get in on the growing cannabis industry, so long as the investor is willing to accept a degree of risk.