3 Reasons to Consider a Cannabis ETF
While recent statements from legal officials at the federal level take a little of the luster off the continuing momentum of the medical and recreational marijuana industry, there are still plenty of reasons to consider a cannabis ETF. The Cannabis Growth ETF [BUDX] is one of the first open-end ETFs to invest primarily in companies related to the cannabis industry. It provides investors access to a growing, emerging industry via a professionally managed investment.
Reasons to Buy Cannabis Stocks
Before expanding on the possibilities of marijuana investment, it’s important it is helpful to define terms. An open-end ETF is a collective investment scheme able to issue and redeem shares at any time. In common practice, investors purchase shares in the ETF directly from the ETF itself.
A ETF is an investment fund which pools money from many investors to purchase securities (that is, debt securities such as bonds, equity securities such as common stocks, and derivatives such as futures). ETFs are professionally managed. Here are reasons why investors might invest in cannabis-focused ETFs in particular:
Access an Emerging Industry
As legalization spurs the expansion of various health care and consumer uses, the global cannabis market is anticipated to grow significantly. Cannabis and its extracts are known to be effective in the treatment of chronic pain, glaucoma, epileptic seizures, and anxiety. Further research is being pursued and with additional discoveries, it is likely that the international medical cannabis market could grow even more.
In terms of recreational applications, cannabis has potential for multiple consumer applications. The beverage industry could be disrupted by cannabis products entering the market, competing with energy drinks, carbonated beverages, coffee, and alcohol. Recreational users may also respond positively to a range of products such as tablets, edibles, and other packaged goods.
Participate in a Growth Opportunity
Cannabis Growth ETF seeks to invest in what the portfolio management team believes are high-quality established and emerging global companies of generally more than $100 million in market cap and engaged in legal cultivation, production, marketing, or distribution of cannabis products. The ETF seeks to help investors capitalize on the growing, innovative cannabis industry across various subsectors, in order to provide broad-based exposure.
Professional Management
As of December 2018, there were over 300 small-, mid-, and large-cap companies participating in medicinal or recreational use of cannabis. The cannabis industry is growing quickly! The opinion of Cannabis Growth ETF is that knowledgeable and dedicated professionals can help investors mitigate inherent volatility and identify favorable growth opportunities, such as initial public offerings. The ETF also has the flexibility to use options in an attempt to enhance the ETF’s return and reduce volatility.
The ETF is a specialty and actively managed portfolio focused on investing in the cannabis industry, providing potentially small-cap, aggressive growth exposure. When including the ETF in an overall portfolio, investors should consider their long-term objectives and goals and place the ETF appropriately within an equity portfolio.
Should You Invest in Marijuana Stocks
Pot stocks can be temperamental but as legislation has continued to expand the opportunities for the marijuana market. Former Republican House Speaker John Boehner is on the board of cannabis company Acreage Holdings, along with former Republican Governor of Massachusetts, Bill Weld. Boehner believes that federal legalization or decriminalization of cannabis in the United States could be on the table as soon as 2020 or 2021. Similarly, the tide appears to be turning in Mexico, where two movements are converging to advocate for legalization of medical marijuana: the users who benefit from its pain-relieving properties, and the anti-cartel movement who want to strip a major source of illegal revenue from Mexican organized crime. Cannabis Growth ETF is administrated by Foothill Capital Management, a specialized asset manager focused on innovative, fast-growing, and emerging markets. We strive to provide investors with an aggressive growth component in their equity portfolios. The members of our core executive team, all seasoned investment professionals, have worked together for over 25 years. They all have experience in providing a full range of services for ETF companies. If you want to find out how to invest in cannabis stocks with us, you can call (800) 446-1179.
OF SPECIAL NOTE
Statements, estimates and forecasts are subject to significant legal, business, economic, and competitive uncertainties, including competition, limited access to bank services, litigation, enforcement actions, and the receipt of government authorizations. This includes differences in, among other things, laws, regulations and guidelines relating to the manufacture, transportation, and storage of cannabis, and the conduct of operations, which vary among the U.S. federal government, various states, and foreign jurisdictions. There can no assurance that such estimates and/or forecasts will be realized, and these are not indicative of future investment performance. Historical data is not indicative of future performance.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained from 888.885.0588 or at https://www.cannabisgrowthfunds.com/. Please read the prospectus carefully before you invest.
Investing involves risk, including possible loss of principal. The cannabis industry is subject to rapidly evolving laws, rules and regulations, and increasing competition which may cause such companies to change business model, shrink or suddenly close. These may limit access to banks, and create significant burdens on company resources due to litigation, enforcement actions, receipt of necessary permits and authorizations to engage in medical cannabis research or to otherwise cultivate, possess or distribute cannabis. Possession and use of cannabis is illegal under federal and certain states’ laws, which may negatively impact the value of Fund investments. Where legalized by states, cannabis possession and use remains a violation of federal law. The companies in which the Fund invests are subject to various laws and regulations relating to the manufacture, management, transportation, storage and disposal of cannabis, including health and safety, conduct of operations, and environmental protection. Even if a company’s operations are permitted under current law, they may not be permitted in the future, and a company may not be able to continue operations in its current location. Controlled substance legislation differs significantly between countries and may limit a company’s ability to sell products.
Foreign investing involves social and political instability, market illiquidity, exchange-rate fluctuation, high volatility and limited regulation risks. Emerging markets involve different and greater risks, as they are smaller, less liquid and more volatile than more developed countries. Investments made in small, mid-capitalization and micro-capitalization companies may be more volatile and less liquid due to limited resources or product lines and more sensitive to economic factors. Fund investments will be concentrated in an industry or group of industries, and the value of Fund shares may rise and fall more than more diversified funds. Purchasing and writing put and call options entails greater than ordinary investment risks. Options ownership involves the payment of premiums, which may negatively impact Fund performance. Please see the prospectus for details of these and other risks. Distributed by IMST Distributors, LLC.