INTERNATIONAL – The first marijuana exchange-traded fund (ETF) has reached a milestone that has as much to do with surging pot stocks as it does with investor inflows.
The Horizons Marijuana Life Sciences Index ETF’s total assets have grown to more than C$1 billion (R11.5bn) as shares rallied 124 percent since its April 2017 debut on the Toronto Stock Exchange.
It’s the first cannabis-focused fund to break the billion-dollar mark. Known by its ticker HMMJ, the ETF has benefited from burgeoning investor demand for pot stocks.
“HMMJ’s growth has far exceeded our expectations as investors have strongly supported the sector in anticipation of Canada’s upcoming recreational marijuana legalisation,” Horizons chief executive Steve Hawkins said in a statement.
Canada will legalise recreational use on October 17.
Enthusiasm for the fund, whose assets total about US$783 million (R11.9bn), appears to have cooled somewhat last month, however, as investors pulled money out in six of the the seven trading days between August 21 and August 29.
They withdrew a total of C$15.9m over that stretch before plowing C$14.1m back in on August 30, bringing the month’s total inflows to C$12m.
Meanwhile, buyers in the US have been scooping up shares of the $436m ETMG Alternative Harvest ETF, known by its ticker MJ. It took in more than $30m August, its largest monthly inflow since January.
Pot stocks have been surging since mid-August, when Corona beer maker Constellation Brands invested C$5bn in Canopy Growth, a signal that mainstream companies are beginning to see the potential in cannabis.
Canopy, the second-largest holding in HMMJ, has seen its stock price more than double since the deal was announced. HMMJ has gained 54 percent over the same period.
HMMJ invests in life sciences companies with significant activities in the marijuana industry. Its holdings include major cannabis producers as well as ancillary businesses such as Scotts Miracle-Gro.