Why actively managed cannabis ETFs might be a better investment option

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Investors not ready to target specific cannabis companies can rely on ETFs for gains

It’s no secret that exchange-traded funds (ETFs) have begun to take off in a big way, following the expected potential federal legalization of marijuana. At the moment, three actively managed ETFs could be of great interest to investors as they wait for a resolution to be handed down by the new Joe Biden administration. They’re also beneficial for those who aren’t sure how to make the right choices in cannabis investments.

Amplify Seymour Cannabis ETF (CNBS) has ultimately chosen to invest the majority of its net assets in companies whose cannabis-based earnings exceed 50%. It is considered an actively managed ETF that seeks to help all those companies involved in cannabis and hemp in order to provide investment exposure to one of today’s most emerging industries.

The second is Cambria Cannabis ETF (TOKE). It has long been intended to revalue equity investments in global equity markets that have exposure to the growing cannabis industry. If there is not much risky movement in the market, the idea is to invest at least 80% of the fund’s net asset value in companies that have a strong relationship to cannabis. These companies need to have a clear focus with respect to the market capitalization of shares, no matter how small the market capitalization is.

Finally, there is AdvisorShares Pure Cannabis ETF (YOLO). This ETF targets something very similar to CNBS. Its primary investment objective is to invest 80% of its net assets in companies whose net revenues from the marijuana business exceed more than half of its total. However, it also allows those revenues to come from derivatives that have some type of economic characteristic that resembles those securities.