Amplify ETFs has consolidated its global and US funds that offer exposure to the cannabis industry, signifying the latest example of cautious optimism surrounding the popular controlled substance.
The Chicago-based ETF issuer, which officially closed its U.S. Alternative Harvest ETF (MJUS) on Jan. 27, will replace the MJUS slice of the global Amplify Alternative Harvest ETF (MJ) with the actively managed Amplify Seymour Cannabis ETF (CNBS).
“When we concluded MJUS was not going to have the success we’d like, we went from three to two products, and we revised CNBS to focus on U.S. names,” said Amplify President Bill Belden.
What this essentially means for cannabis investors is that they’ll face a shrinking list of ETF options at a time when a more inviting regulatory landscape appears around the corner under a Trump administration.
“We’re in it to win it, and we believe cannabis has a brighter future ahead of it,” said Belden, who is banking on a rescheduling of cannabis in the U.S. from a Schedule 1 to a more recreational Schedule 3 drug.
That change, which originates at the US Drug Enforcement Administration, is seen as crucial to legalizing marijuana at the federal level, which would expand banking access to the industry and ultimately grow the industry.
Cannabis ETFs Going Up in Smoke
According to etf.com data, the state-by-state legalization trend that started in 2012 has produced limited investment success. Six exchange-traded funds currently offer exposure to marijuana investments, ranging in size from the $443 million AdvisorShares Pure US Cannabis ETF (MSOS) to the $6.5 million Roundhill Cannabis ETF (WEED).
In terms of performance, the best return for cannabis ETFs over the past 12 months belongs to the $14 million Cambria Cannabis ETF (TOKE), which still recorded a 13% decline, etf.com data show.
On the other end of the performance spectrum, MSOS posted a 62% decline, which is only slightly better than the matching 64% declines by CNBS and WEED.
Based on the $326 million worth of net inflows going into the category flagship MSOS over the past 12 months, however, there remains a dedicated crop of investors with high hopes for the category.
It’s hard to say where the new money is coming from, but at least one financial advisor is keeping this situation at arm’s length.
“There’s still a healthy dose of skepticism surrounding Trump’s cannabis policy and investors should approach cannabis ETFs with caution,” said Said Israilov, founder of Israilov Financial in San Francisco.
“Trump’s campaign rhetoric suggested support for rescheduling and cannabis banking reforms, but the reality is far less clear,” he added. “While cannabis ETFs may appear to be in a buy-low position, the regulatory landscape remains highly uncertain.”
Jeff Benjamin is the wealth management editor at etf.com, responsible for coverage related to the financial planning industry. This includes writing, hosting podcasts, webinars, video interviews and presenting at in-person events.
Jeff is a veteran journalist with more than 30 years’ experience covering the financial markets. He has won more than two dozen national and regional awards for his reporting. He most recently worked as a senior columnist at InvestmentNews where he wrote about investment products and strategies, as well as the broader financial planning industry. Prior to that, Jeff worked as an analyst at Cerulli Associates where he researched and wrote reports on the alternative investments industry. Jeff also worked as a money management reporter at Dow Jones Newswires, where he covered the mutual fund industry.
H/T: www.etf.com
You can view the whole article at this link Are Cannabis ETFs Getting High on Their Own Supply?
