Another Cannabis ETF Debuts

July 23, 2019

Today Amplify rolled out its own marijuana-focused ETF, following in the footsteps of ETF Managers Group and AdvisorShares. The Amplify Seymour Cannabis ETF (CNBS) is actively managed and invests in companies at the global level that are involved in the overall hemp and cannabis ecosystem.

CNBS comes with an expense ratio of 0.75% and lists on the NYSE Arca exchange.

“The global legal cannabis industry is still very much in its infancy and presents an attractive growth opportunity for investors looking to capitalize on this emerging frontier,” said CNBS Portfolio Manager Tim Seymour, who has been investing in the space for four years.

Seymour, a recognized expert in the cannabis space, is also CIO of Seymour Asset Management and a co-host on CNBC’s Fast Money.

Details

The fund targets companies involved in the production of hemp or cannabis products; companies that support said production through such areas as agricultural technology, retail operations and real estate; and companies involved in “ancillary” business activities, such as consumption devices.

Firms eligible for inclusion in the fund must meet minimum size and liquidity requirements, and can only engage in marijuana production for legal, medical purposes. The prospectus notes the fund does not currently include companies that grow or distribute marijuana within the U.S. because of this.

CNBS’ portfolio is expected to hold 35-45 securities selected from the small, mid and large cap size segments. The fund can invest in stocks and American depositary receipts, and primarily invests in stocks listed on U.S. or Canadian stock exchanges.

Seymour notes the fund is primarily invested in Canadian companies, with exposure to Israel and Australia also allowed under the fund’s investment standards.

Competition

The ETFMG Alternative Harvest ETF (MJ) was the first fund on the scene, in October 2017, while the AdvisorShares Pure Cannabis ETF (YOLO) launched in April. YOLO, like CNBS, is actively managed, and currently has nearly $60 million in assets under management. MJ has $1.1 billion in assets. Most recently, Innovation Shares launched The Cannabis ETF (THCX) almost two weeks ago.

“The view is that, between the fast-paced evolution of the sector as it relates to technology and ancillary support—not just the kind of the obvious cultivation names and the big integrated companies—the industry is changing by the day,” said Seymour.

“The investable profile from a capital markets perspective is changing by the week, in terms of the list of names, the exposure to new parts of the industry, the capital markets and the M&A dynamics,”  he added. “We think that active is the only way to do this. And we think the exposure within active clearly should not necessarily be market cap weighted.”

Contact Heather Bell at [email protected]

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