Converted Marijuana ETF To Close

March 31, 2022

With cannabis stocks getting new interest from investors as the House meets on legalizing marijuana at the federal level, the sponsor of the Cannabis Growth ETF (BUDX), Foothill Capital Management, has opted to close the fund, roughly six months after it converted it from a mutual fund into an ETF with $3.9 million in assets under management. April 25 is expected to be its last day of trading.

When BUDX launched as a marijuana ETF, it was entering a very crowded market, with several existing ETFs tracking cannabis representing billions of dollars in assets.

The largest is currently the $1 billion AdvisorShares Pure US Cannabis ETF (MSOS), which launched in 2020 and usurped the original ETFMG Alternative Harvest ETF (MJ) as the largest U.S.-listed marijuana ETF. MSOS has pulled in nearly $760 million over the last 12 months, while MJ lost more than $145 million. Prices for marijuana stocks overall have been in a slump recently.

Back in September 2021, Foothill Managing Director Max Banhazl told ETF.com that the mutual fund had trouble getting shelf space on securities broker platforms, and it may have run into the same problem after it adopted the ETF wrapper.

BUDX is the first ETF that converted from a mutual fund into an ETF to close. It brings the total number of announced and completed closures for the year to 33. A total of 16 ETFs have closed so far this year compared with 19 last year.

However, the planned closures of BUDX, eight funds issued by ProShares and five funds issued by Transamerica that are set to complete by early May boosts the total well ahead of last year’s comparable number for the same period.

 

Contact Heather Bell at [email protected]

Find your next ETF

Reset All