Liquid Alternatives: Europe’s First and Only Medical Cannabis UCITS ETF To Launch Next Week
It will also be the first European ETF from Purpose Investments, the Toronto-based asset manager and ETF issuer.
The Medical Cannabis and Wellness UCITS ETF (CBSX GR) will trade on Deutsche Börse’s Xetra. It is the first UCITS ETF to deliver targeted exposure to the fast-growing medical cannabis industry (ETF Strategy).
Purpose already runs a Canadian cannabis fund
Purpose Investments is not a newcomer to the pot industry. It already manages the Purpose Marijuana Opportunities Fund (MJJ CN) listed on Canada’s NEO Exchange.
The fund was Canada’s first actively managed cannabis fund. However, returns over the last year are (-) 28.47%, and reflect the massive sell-off in marijuana stocks during 2019.
Purpose had more than C$8bn in assets under management as of December 2019.
Tracking index for the Medical Cannabis and Wellness UCITS ETF
The Medical Cannabis and Wellness UCITS ETF will track the Medical Cannabis and Wellness Equity Index. The index comprises listed companies conducting operating legally in the medical cannabis, hemp, and CBD industries. Moreover, selected companies should list on the larger exchanges such as the NYSE, Nasdaq, and TSX.
Furthermore, it is a rules-based index constructed by the leading thematic index provider Solactive. The index will cover the following sectors:
- Producers and suppliers of medical cannabis;
- CBD-focused biotech companies;
- Hydroponics and equipment suppliers;
- Producers of medical cannabis consumer products;
- Companies leasing property to medical cannabis growers;
- Software solutions for medical cannabis producers;
- Companies with an investment focus on medical cannabis;
- Hemp and CBD consumer goods suppliers, and
- Service providers, including equipment, manufacturing, and processing.
Medical Cannabis and Wellness UCITS ETF – White label launch
Purpose has collaborated with London-based white-label ETF provider HANetf on the launch of the Medical Cannabis and Wellness UCITS ETF.
“The medical cannabis industry was pioneered in Canada, and we’re thrilled with the opportunity to partner with HANetf to take what we have learned from our Purpose Marijuana Opportunities Fund (MJJ) to Europe,” said Som Seif, CEO of Purpose Investments.
Hector McNeil, co-Founder and co-CEO at HANetf, added, “Up until now, European investors have experienced restricted access to the cannabis market. With the launch of this truly innovative ETF, there is now a product for investors who want exposure to the cannabis industry through a pre-screened basket of cannabis securities and in a regulated UCITS ETF.”
Scope for the marijuana industry
“We believe that the cannabis sector is still in the infancy stages of a multi-year growth phase and that there is ample opportunity for innovation and new discoveries. We are very excited to embark on this journey with HANetf in a global investor market,” said Seif.
Medical cannabis and cannabidiol (CBD) products treat conditions such as cancer, epilepsy, and chronic pain. As of 2018, the global market size of medical cannabis was $13.4 billion. However, experts forecast it to reach a value of $148 billion by 2026, translating to a CAGR of 26.4%.
Moreover, according to one view, marijuana stocks are likely to bottom out in 2020. Cannabis, therefore, presents a unique opportunity to invest in a “sin” industry like tobacco or liquor at the current beaten-down prices. Both these industries have provided solid returns to investors over the very long term.
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