In the final days of 2017, MJX, the ETFMG Alternative Harvest ETF (exchange-traded fund) went live on the New York Stock Exchange Arca. This fund follows the Prime Alternative Harvest Index, which “tracks companies likely to benefit from the increasing global acceptance of various uses of the cannabis plant,” according to ETFMG.
In the ensuing month, the fund has generated nearly $300 million in investments.
On Dec. 26, 2017, when MJX began trading as a cannabis-backed ETF, the fund closed at $30.23. As of Jan. 25, the fund closed at $37.33.
“As an ETF issuer we are excited about opportunities for innovation, the chance to give investors exposure to new markets and doing our part to impact the continued evolution of the ETF industry by meeting the appetite of investor interest,” said Sam Masucci, founder and CEO of ETFMG, according to a public statement on Dec. 26.
Previously, MJX traded as a Latin American real estate fund.
Now, though, about half of MJX is comprised of Canadian licensed large-cap producers, with Cronos Group Inc., Canopy Growth Corp., Aurora Cannabis Inc. and MedReleaf Corp. leading the holdings.
Today, the investment app Stash added MJX to its offerings. The mobile trading company, which allows $5-per-day investments for fractions of a share of a certain fund, has this to say about MJX: “The companies held by the fund may be subject to heightened legal risk, as use and possession of marijuana is currently illegal under U.S. federal law, and under many state laws and international laws. … [MJX] is considered a risky investment. Stash will send you an overexposure warning, urging you to diversity, if you invest more than $100 in [MJX], and that amounts represents more than 10 percent of your portfolio.”
That said, MJX remains one of the more buzzworthy topics in the ETF investment world. Increasingly, as U.S. states debate legalization and as Canada looks toward its conceivable July 1 legalization date, investment fund managers will look to licensed cannabis producers for opportunity.
Elsewhere, the AdvisorShares Vice ETF began trading on the NYSE on Dec. 12, 2017. That fund “invests in US companies involved in alcohol-, cannabis-, or tobacco-related activities,” according to ETF.com.
Using those funds’ Toronto Stock Exchange counterparts as examples, investors can learn about cannabis industry trends from the performance of the Horizons Medical Marijuana Life Sciences ETF, which debuted in April 2017. Since then, that fund has brought in more than $550 million in public investment.
"I see this as something like the early days of the internet where many companies failed and a few grew into massive success stories," Anthony Welch, president of Sarasota Capital Strategies in Osprey, Fla., told SeekingAlpha.com. "As with the internet, the makeup of a cannabis fund today will look much different than the same fund 20 years from now."
Top photo courtesy of Adobe Stock
