Although it never mentions the word “marijuana,” the latest filing from Teucrium Trading definitely has an herb-y aroma to it. The Teucrium Emerging Medical Agriculture Index Fund (MEDA) will cover a wide range of companies involved in medical agriculture or that offer support services to such firms.
According to the prospectus, companies are selected for the fund’s index at the global level, and can include biotechnology firms that do research around emerging medical agriculture; firms that invest in emerging medical agriculture businesses; or firms that provide hydroponic or other types of equipment. Other companies in the index can provide ancillary support in the areas of real estate, finance, media or agricultural science.
The index can also select securities from across the market-capitalization spectrum, and generally will include 20-30 stocks. To be included in the index, a company must have at least $15 million in market capitalization and meet minimum liquidity requirements. The component list is reviewed every quarter to determine if the index should be rebalanced and/or reconstituted, the prospectus said.
Weightings are based on modified market capitalization, with individual weights capped at 12% of the index.
Although marijuana remains illegal at the federal level, there is growing interest in its potential medical benefits and a growing push toward legalization. It’s still hard to invest in the legal marijuana industry as the companies tend to be either very small or the marijuana business tends to be a very small part of revenues.
However, just this week, AdvisorShares launched the actively managed AdvisorShares Vice ETF (ACT), which invests in tobacco and alcohol companies, as well as firms engaged in legal marijuana research. And later this month, ETF Managers Group’s Tierra XP Latin America Real Estate ETF (LARE) is set to transition into the Alternative Agroscience ETF, which will track firms with direct and indirect involvement in the marijuana industry.
The filing is a bit of a departure for Teucrium, which is primarily involved in the commodity industry, and has five futures-based ETFs currently trading. Its largest fund is the $65 million Teucrium Corn Fund (CORN). The firm has not launched an ETF since 2012.
The filing did not include an expense ratio, but indicated the fund will trade on the NYSE Arca.
Contact Heather Bell at [email protected]