Canada was the first country in the world to offer a cannabis-themed ETF last year. However, it will add another one under its belt this Thursday.
The difference between the former and the latter is that the second fund – The Marijuana Opportunities Fund – is actively managed.
On Thursday morning, Redwood Asset Management, a subsidiary of Purpose Investments, will start trading the brand new fund, The Globe And Mail newspaper reported.
Redwood Asset Management was formed by Canadian ETF pioneer Som Seif in 2013.
Horizons ETF Management (Canada) Inc. was behind the first cannabis-themed ETF, launched last spring, with the ticker: HMMJ trades on TSX, the fund tracks the North American Marijuana index and quickly collected more than $100-million in assets under management within the first month.
So far, HMMJ has more than $800-million in total assets under management. HMMJ also managed to surpass broader market-tracking ETF, for instance, its year-to-date inflows of $243-million are almost double those of the BMO S&P 500 Index ETF, which has had inflows this month of $132-million, according to Bloomberg data.
Twelve Companies Included
Vlad Tasevski, vice-president at Redwood and Purpose Investments, said the fund initially has approximately 12 individual companies.
These companies are “more directly focused on the cannabis” sector, he said in comparison with other funds in the market, Tasevski explained.
The big marijuana companies that made headlines such as Canopy Growth, Aphria and Cannimed will be included in the fund.
Also, stocks not commonly found in competitor funds such as Village Farms International Inc., an organic greenhouse farmer, will be included.
“There are always going to be winners and losers in a sector and not every company will win. Given the lack of institutional investors at this point in time, volatility is very high.”
He added: “This makes active, selective management preferable to passive index funds.”
Canada is expected to be the first developed nation to legalize marijuana.