XXII - New Cannabis ETF Makes European Debut
An investment firm has launched its first marijuana exchange-traded fund (ETF) in Europe.
The Medical Cannabis & Wellness UCITS ETF (XETRA:CBDX) began its listing on Tuesday (January 14), and is available to investors on the Deutsche Boerse XETRA exchange based in Germany.
The new ETF has 13 holdings at this time and is overseen by a partnership between Purpose Investments and European firm HANetf, which has the backing of investor Steve Cohen’s Point72 Ventures, according to a press release.
Nawan Butt, associate portfolio manager with Purpose Investments, told the Investing News Network (INN) the European investor market has been underserved when it comes to the cannabis growth story.
“At the forefront of European cannabis investing are family offices and hedge funds, which essentially have historically been named specific investors, and what we aim to offer them is a beta exposure to the industry as a whole,” said Butt.
“Our goal is to take the wins and take the experiences from these investors and introduce European retail investors to the cannabis investment space within their regulatory frameworks.”
The Purpose Investments representative said the firm has been working with HANetf for the past year to get this ETF off the ground.
“Most European investors are limited to how they can invest in cannabis,” Butt told INN, adding that the market itself is at a very early stage, a few years behind what’s currently seen in Canada and the US.
The appetite is there for growth, but the industry will have to overcome regulatory hurdles, such as the ability to invest in recreational cannabis. Once that opens up, the European investor will have more global access.
When asked about the process for adding new stocks to the fund’s holdings, Butt said the index will employ a quarterly rebalance.
“Which means on a quarterly basis, there will be moves,” Butt said. “This is not dissimilar to what we’ve seen with the (Horizons Marijuana Life Sciences Index ETF [TSX:HMMJ]), where they’ve had large moves and index participants on a quarterly basis.”
The fund made an active decision to not include any names with ties to the recreational cannabis industry, so this discounted a lot of the Canadian corporations with significant valuations.
Butt said the fund will target the medical industry, the cannabidiol wellness segment and ancillary options. Here’s a list of the initial holdings made available through the fund:
- Corbus Pharmaceuticals Holdings (NASDAQ:CRBP)
- Scotts Miracle-Gro (NYSE:SMG)
- Innovative Industrial Properties (NYSE:IIPR)
- GW Pharmaceuticals (NASDAQ:GWPH)
- 22nd Century Group (NYSEAMERICAN:XXII)
- Amyris (NASDAQ:AMRS)
- Charlotte’s Web (TSX:CWEB,OTCQX:CWBHF)
- Zynerba Pharmaceuticals (NASDAQ:ZYNE)
- Pharmacielo (TSXV:PCLO,OTCQX:PCLOF)
- Cara Therapeutics (NASDAQ:CARA)
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.