New Cannabis ETF Offers Lower Fees and Sin-Free Exposure
July 9th, 2019
Innovation Shares, a new exchange-traded fund (ETF) issuer, launched The Cannabis ETF (THCX) today.
The Cannabis ETF will track The Innovation Labs Cannabis Index — a rules-based equity index that consists of global companies that have a business interest in the legal cannabis, hemp or CBD-based pharmaceutical, consumer products and wellness markets. Currently, the fund holds a total of 36 stocks, including 19 stocks that trade in the United States.
Unlike competing cannabis ETFs, the fund does not include any exposure to tobacco or alcohol ‘sin’ stocks. The ETF also rebalances on a monthly basis — more frequently than its competitors — to smooth out some of the longer term volatility in the space, and its 70 basis point management fee makes it the lowest cost cannabis ETF in the market.
“With the global cannabis market estimated to reach $630 billion by 2040 up from $12 billion today, there is an exciting opportunity for investors to participate in this multi-decade growth story through the tax efficient structure of an ETF,” said Innovation Shares Managing Director Matt Markiewicz in a statement.
The market cap-weighted ETF’s largest holdings include familiar names, like Aurora Cannabis Inc. (ACB), Canopy Growth Corp. (CGC) and GW Pharmaceuticals plc (GWPH). The broad exposure to recreational, medical and wellness markets could insulate the ETF from the impact of regulations or developments that affect primarily the recreational market.
The launch marks the third cannabis-focused ETF in the United States alongside the ETFMG Alternative Harvest ETF (MJ) and the AdvisorShares Pure Cannabis ETF (YOLO). The two existing ETFs have just over $1 billion in assets under management as investors increasingly look towards ETFs to provide diverse exposure to the cannabis industry.
Innovation Shares’ other ETFs have been strong performers. For instance, the blockchain-focused Innovation Shares NextGen Protocol ETF (KOIN) is up more than 25% year to date.
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