Don't Miss These 2 Ways To Play The Hot Marijuana Stocks Industry
After soaring to all-time highs last month, exchange traded funds tracking cannabis stocks are coming back down to test a key support line.
And if they find support and stage a solid rebound off the 10-week moving average, that could set up a chance for investors to buy or add shares. But keep in mind: Market risk is high right now.
AdvisorShares Pure Cannabis (YOLO) is an actively managed ETF launched in April 2019. The $425.8 million fund invests in marijuana stocks across a wide range of industries, such as agriculture, biotech, pharmaceuticals, real estate and retail.
At the end of February, the U.S. accounted for about 61% of total assets. Canada weighed in at 29% and the U.K. 6%. Cash and a small position in Israel made up the rest.
Together, they represented nearly 52% of the 46-stock portfolio. Aphria leads with a 141% gain this year through Thursday's close. The Canada-based company produces and sells medical cannabis and other products.
Drugmaker Soars, REIT Slips
GW Pharma, up 86%, is a U.K. biotech whose epilepsy treatment became the first cannabis-derived drug approved by the Food and Drug Administration. Jazz Pharmaceuticals' (JAZZ) $7.2 billion acquisition of GW is expected to close this quarter.
Village Farms, a greenhouse grower of vegetables and hemp, is up 39%. Canadian pot producer Canopy Growth holds a 25% year-to-date gain after falling 45% from its peak. Canopy this month launched Quatreau, a sparkling water with hemp-derived CBD, in the U.S.
Innovative Industrial Properties is nearly flat for 2021, after a 141% surge last year. The Utah-based real estate investment trust buys and leases industrial real estate used to grow medical marijuana.
Heading into Friday, YOLO was up 39% this year, on track to extend last year's 42% gain. It charges a 0.75% expense ratio.
Global X Cannabis (POTX), up 56% this year, fell 34% in 2020. The $203.8 million fund launched in September 2019. It charges 0.50%.
Big In Canada
Canadian cannabis stocks accounted for 80% of the 25-stock portfolio as of Feb. 28. About 9% was in Britain, 7% in the U.S., and 4% in Australia. Consumer staples represented the biggest sector weight, 64%, with health care at 18%, industrials 9.5% and financials 5%. Less than 2% each was in consumer discretionary and information technology.
The top five holdings, about 40% of assets, included Aphria and GW Pharma. Tilray (TLRY), a Canada-based maker of cannabis-based drugs and oil products, has surged over 170% this year. It tumbled 52% last year. Tilray owns Manitoba Harvest, which sells hemp granola and other foods.