Industry Updates

HANetf to merge cannabis and healthcare megatrends ETFs

The news marks the third ETF merger announcement so far in September

Jamie Gordon

Cannabis plant

HANetf has announced its “no longer viable” medical cannabis and wellness ETF will be merged into its healthcare megatrends equal-weight ETF, in a further sign of consolidation within the thematic space.

At an extraordinary general meeting (EGM) on 15 September, shareholders of the $10m Medical Cannabis and Wellness UCITS ETF (CBDX) voted in favour of the product being absorbed by the $9m HAN-GINS Indexx Healthcare Megatrends Equal Weight UCITS ETF (WELL).

HANetf said the merger is set to take place “on or after” 29 September. 

It comes after a challenging market backdrop for the cannabis sector has seen CBDX’s underlying index shrink as some pure play companies have either become too small to be liquid while others have delisted altogether.

HANetf said in a statement: “Over the past two years, the medical cannabis sector has experienced increased compression and a narrowing universe, exacerbated by unfavourable market conditions.

“These developments have been reflected in investor sentiment and led to CBDX no longer being viable.”

The white-label issuer noted the ETF’s assets under management (AUM) fell “significantly” over the past two years and no improvement is expected “in the short to medium term”.

It added WELL – which captures emerging healthcare companies involved in life sciences and neuroscience – represents a viable alternative.

The move comes within weeks of news the $37m L&G US Energy Infrastructure MLP UCITS ETF (MLPX) will be merged with the $20m Alerian Midstream Energy Dividend UCITS ETF (MMLP) and managed by HANetf from 12 October.

HANetf co-founder and co-CEO Hector McNeil said the merge could be just the first of a number of ETF mergers for subscale products where providers are looking to share the costs of operating their range.

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