Competition for marijuana ETFs is heating up

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The response to the ETFMG Alternative Harvest ETF is going to see more products introduced

This past Tuesday, the ETFMg Alternative Harvest exchange-traded fund (ETF), the only ETF that is completely based on marijuana, reached more than $1 billion in assets under management. It is now the world’s largest marijuana ETF and is going to shutter in a whole new line of marijuana ETFs and futures trading products that will attract a whole new segment of institutional investors.

The ETF didn’t get off to a good start when it was introduced 14 months ago. Its launch was awkward and its former custodian, US Bank, was pushed out last September in favor of LA-based Wedbush Securities. There have been consistent high trading spreads that have impacted its performance, as well, but it is now reaching the level most investment enthusiasts always knew it could reach.

The ETF is now up 47% year-to-date and 23% in the past 12 months. This is raising interest of more than a few companies that are now looking to introduce their own ETFs. One of these, Innovation Shares, filed for a marijuana ETF last November. AdvisorShares also jumped in, filing for its AdvisorShares Pure Cannabis ETF at the end of January.

Amplify ETFs has now filed for the Amplify Seymour Alternative Plant Economy ETF, which was previously submitted for a fund that had a different investment objective. Its prospectus shows a more cautious approach, however, saying that it won’t hold U.S.-based growers or distributors of marijuana or even medical marijuana companies.

All three of the latest marijuana ETFs are being introduced by existing, reputable trusts. This is certain to give them a strong footing from the start if and when they’re approved by US regulators.


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