Some of Aphria's medical marijuana plants grow in their greenhouse in Leamington, Ontario, May 26, 2014.GEOFF ROBINS/The Globe and Mail
Investors looking to jump into pot stocks may soon be able to do so with an additional Canadian-listed exchange-traded fund that focuses on the marijuana industry.
Horizons ETFs Management (Canada) Inc. has filed a preliminary prospectus with regulators in hopes of launching a second marijuana-focused fund. It is looking to capture small-cap companies in the industry with the Horizons Junior Marijuana Growers Index ETF.
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. It currently has $790-million under management.
Similar to HMMJ, the new fund will not come cheap, with a management fee of 0.85 per cent.
With the ticker HMJR, the Horizons Junior Marijuana Growers Index ETF seeks to replicate the performance of the Solactive junior 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.
This could include companies such as Marapharm Ventures Inc.
"With the growth of the industry, we have seen many new companies come online from a capital-markets perspective, which allowed us to create an ETF that is going to be exclusively focused on marijuana producers and growers," said Steve Hawkins, president and co-chief executive at Horizons ETFs. "So this fund – unlike HMMJ – will not include the bio-pharmaceutical and ancillary businesses of the 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.
"We believe this is an area that has significant growth prospects and where investors are looking for more specialized investment options," Mr. Hawkins said.
If approved, HMJR will launch on the NEO exchange – another difference to Horizons's first fund 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.
Clare O’Hara