Industry Updates

Investing in weed because You Only Live Once

George Geddes

a group of lights in the night

AdvisorShares has completed its application for a cannabis ETF, according to a recent


with the US Securities and Exchange Commission (SEC).

The AdvisorShares Pure Cannabis ETF will trade on the New York Stock Exchange, if the application is approved, under the ticker YOLO (or You Only Live Once for anyone not with the times).

The firm launched the AdvisorShares VICE ETF (ACT) at the end of 2017, which was comprised with companies producing revenue from either tobacco, alcohol or cannabis. After the firm dipped its toe in the cannabis pool, the actively managed YOLO would be solely comprised of companies with at least 50 per cent of their net revenue from the cannabis and hemp industry.

ACT, like the rest of the equity market in Q4 2018, struggled in a bear market with its Net Asset Value falling over 20 per cent in three months. Entering the new year priced just over US$21.00, ACT has since recovered nearly 10 per cent. Again, this ETF includes alcohol and tobacco among the cannabis companies which contradicts the current Environment, Social and Governance fad.


ACT's 12-month NAV - Source: Bloomberg

One of the fastest growing cannabis ETFs in the US was the ETFMG Alternative Harvest ETF (MJ). Comprised of 37 stocks, the largest four holding accounts for 36 per cent of the ETF's weight. The top four stocks have performed well this side of the new year, causing MJ's NAV to face an upward trend throughout January.

chart, line chart

MJ's 12-month NAV - Source: Bloomberg

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