Changes are coming as the exchange-traded fund responds to market adjustments
Although the cannabis industry is growing at a steady pace, with legal sales in the billions globally this year, shares of companies in the space have proven to be far more volatile than expected, especially in the last year. In this context, cannabis ETFs (exchange-traded fund) emerge as a practical possibility to easily diversify an investment and reduce the natural risk of the stock market. The Roundhill Cannabis ETF has undergone some recent changes as Roundhill Investments seeks to refocus the fund’s investment strategy and trim its expense ratio.
Originally, the ETF was intended to invest in a broad range of companies operating in the cannabis and hemp ecosystem. However, the managed fund now intends to focus essentially on multi-state operators (MSOs) in the country. According to the firm, these companies represent bigger opportunities, especially because they are directly involved in the legal distribution and production of cannabis at the retail level in states where it is approved.
Because of the current challenging macroeconomic conditions, Roundhill believes marijuana companies are best positioned to survive a recession and increase market share. According to Roundhill, Tier 1 MSOs, align most closely with this view. These US marijuana companies generate more than $500 million in annual revenue, making them a smart bet.
Since first listing North American Cannabis stock in 2014, the sector has seen increasing legalization, demand and subsequent investor interest. If you believe the marijuana industry will continue its growth, purchasing a marijuana ETF can diversify your investment and balance your portfolio. Roundhill is making very wise moves in this regard.