This Valentine's day could see Canadians looking to grab more green buds than rose buds, as Horizons ETFs Management (Canada) Inc. is set to launch its second marijuana-focused fund, this time tapping into small-cap companies in the industry.
With the ticker HMJR, the Horizons Emerging Marijuana Growers Index ETF seeks to replicate the performance of the Emerging Marijuana Growers Index. The underlying index is designed to provide exposure to the performance of a basket of primarily North American publicly listed small-capitalization companies primarily involved in the cultivation, production and/or distribution of marijuana.
Stocks within the Index generally must have a market capitalization greater than $50-million but less than $500-million for initial inclusion.
"HMJR will give investors direct exposure to a growing group of Canadian and global marijuana cultivation and distribution companies," said Steve Hawkins, President and Co-CEO of Horizons ETFs in a statement. "Marijuana producers are generally well-positioned to take part in the anticipated global expansion of the marijuana sector."
Similar to the gold sector in the United States, where there is the VanEck Vectors Gold Miners ETF (GDX) and the VanEck Vectors Junior Gold Miners ETF (GDXJ), HMJR will focus more on small-cap, early-stage marijuana companies.
Horizons launched the world's first marijuana-focused ETF – the Horizons Marijuana Life Sciences Index ETF – last April. The fund, which goes by the ticker HMMJ – saw more than $100-million in assets under management within the first month. Similar to HMMJ, the new fund has a hefty price tag with a management fee of 0.85 per cent.
But unlike the company's first marijuana fund, HMJR will exclusively focus on marijuana producers and growers and will not include the bio-pharmaceutical and ancillary business of the sector.
HMJR will launch Feb. 14 on the NEO exchange – another difference to HMMJ which launched on the Toronto Stock Exchange. One reason for the switch is to allow for the inclusion of more Canadian-listed operations that do a significant amount of business in the United States.
This could include companies such as Marapharm Ventures Inc., a licensed producer of medical marijuana.
This will be the third marijuana focused ETF launched in Canada. Last month, Redwood Asset Management, a subsidiary of Purpose Investments began trading the country's first actively managed marijuana fund, Marijuana Opportunities Fund (MJJ).