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The 6 Best Marijuana ETFs to Buy Now

Many investors are reluctant to purchase individual marijuana stocks. But ETF or exchange-traded funds make this sector accessible to a wider range of investors. Marijuana ETFs can be source of diversification to your portfolio beyond the usual stocks and bonds.

While the use of marijuana is illegal at the federal level in the United States, more than a dozen US States have legalized the use of medical marijuana for both medicinal and recreational uses.

On top of that, support for the legalization of Marijuana is growing. Indeed, a recent survey reveals that 68% of American adults support the legalization of Marijuana in the U.S, comparing to 12% from 5 decades ago.

Not only that, the global cannabis industry is estimated to reach $630 billion by 2040. This makes it a good time and opportunity for investors to capitalize in this booming cannabis industry through exchange traded funds (ETF).

A financial advisor with experience in this industry can help you decide whether marijuana ETFs belong in your portfolio.

Marijuana ETFs offer a way to gain exposure to a diversified portfolio of cannabis equities while reducing the risk in investing in a single one.

Currently, there are 9 Marijuana ETFs that are traded in the United States. They all combined have total assets under management of $2.56 billion. Marijuana equities are measured by the Marijuana Index (North America). They have underperformed the U.S. stock market over the past 12 months. However, that should not deter you from investing in them. They are fairly new and don’t have a track record yet.

However, the best performing Marijuana ETFs can provide investors with substantial returns. The best performing Marijuana ETF right now, based on last year’s performance, is the Amplify Seymour Cannabis ETF (CNBS).

Here’s a list of the best six marijuana ETFs.

  • Amplify Seymour Cannabis ETF (CNBS)
  • AdvisorShares Pure Cannabis ETF (YOLO)
  • The Cannabis ETF (THCX)
  • ETFMG Alternative Harvest ETF
  • Global X Cannabis ETF
  • MicroSectors Cannabis 2X Leveraged ETN

Marijuana ETF: Overview

Before we discuss the best performing marijuana ETFS, we need to learn the basics. Marijuana ETFs are similar to other traditional ETFs such as bond ETFs or Stock ETF.

According to ETF.com, Cannabis ETFs invest in companies that grow, distribute and sell Marijuana. Or pharmaceutical and biotech companies that research the medical uses of marijuana.

Thus, investors seeking to diversify their portfolios and make good profits can certainly take advantage of these Cannabis ETFs.

What follows is a list of Marijuana ETFs, including their historical performance, dividends, expense ratios and more.

*Helpful tips: Are you looking for ways to diversify your investment portfolio? Crowdstreet is a great option for anyone looking to invest in commercial real estate. Learn more about Crowdstreet.

Best Marijuana ETFs

1. Amplify Seymour Cannabis ETF (CNBS)

The first cannabis ETF in our list is the CNBS. In fact, it has been the best performing Marijuana ETF over the past year. Tim Seymour, an experienced investor in the cannabis industry manages the fund. And the fund seeks to provide investors with capital appreciation. CNBS invests at least 80% of its assets in securities of companies that generate over 50 percent of their revenue from the cannabis and hemp ecosystem across one of the three classifications.

Key stats:

  • Expense ratio: 0.75%
  • Annual dividend yield: 0.44%
  • Performance over one year: 84.9%
  • Assets under management: $135.4 million
  • Price: As of 9/17/2021, the price is $19.80

2. AdvisorShares Pure Cannabis ETF (YOLO)

The second in our list of the best performing Marijuana ETF is the AdvisoryShares Pure Cannabis (YOLO). In fact, it was the first actively managed ETF with cannabis exposure in the United States. YOLO seeks long term capital appreciation by investing in domestic and international cannabis securities. The fund has over $300 million assets under management and has a 1-year-return of 61.4%.

Key stats:

  • Expense ratio: 0.75%
  • Annual dividend yield: 0.58%
  • Performance over one year: 61.4%
  • Assets under management: $310.7 million
  • Price: As of 9/17/2021, the price is $16.70

3. The Cannabis ETF (THCX)

With almost $118.5 million in assets under management, this fund is the go-to way for many investors seeking to profit from the growing cannabis market. Indeed, THCX offers investors with a diversified basket of stocks that are expected to benefit substantially from the growth of the marijuana industry. In addition, this marijuana ETF also comes with a rock-bottom annual expense ratio of 0.70%. The fund is non-diversified.

Key stats:

  • Expense ratio: 0.70%
  • Performance over one year: 49.9%
  • Assets under management: $118.52 million
  • Price: As of 9/17/2021, the price of a share is $ 13.57.

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4. ETFMG Alternative Harvest ETF

With $1.11 billion in assets, the ETFMG Alternative Harvest ETF MJ is by far the largest Marijuana ETF. It was the first cannabis ETF to trade in the US. The fund tracks an index of stocks that are in cultivation, production, marketing or distribution of cannabis either for medical or nonmedical purposes.

Key stats:

  • Expense ratio: 0.75%
  • Dividend yield: $0.06 (quarterly)
  • Performance over one year: 34.84%.
  • Assets under management: $1.12 billion
  • Price: As of 9/18/2021, the price of one ETF is $15.15%.

5. Global X Cannabis ETF

The Global X Cannabis ETF (POTX) invests in companies involved in the production, growth and distribution of marijuana. When it comes to assets under management, this marijuana ETF is also very popular at roughly $131 million in total cash right now. It also has a very low expense ratio of 0.51%. In addition, the top holdings include Aurora Cannabis Inc (ACB), Organigram Holdings Inc (OGI CN), Sundial Growers Inc (SNDL), and Tilray Inc-Class 2 Common (TLRY).

Key stats:

  • Expense ratio: 0.51%
  • Annual dividend yield: $0.10 (semiannual)
  • Performance over one year: 15.01%
  • Assets under management: $131 million
  • Price: As of 9/17/2021, the price is $9.33

6. MicroSectors Cannabis 2X Leveraged ETN

The last marijuana ETF on our list is the MicroSectors Cannabis 2X Leveraged ETN. This fund tracks the return of the index MicroSectors North American Cannabis index. It provides a strong historical performance to its investors of 77.5% return a year. Moreover, the top holdings include Abbvie Inc, Agilent Technologies Inc. (A), Sundia Growers Inc (SNDL), Thermo Fisher Scientific Inc (TMO), etc.

Key stats:

  • Expense ratio: 0.95%
  • Annual dividend yield: none reported
  • Performance over one year: 77.51%
  • Assets under management: $17.92 million
  • Price: As of 9/17/2021, the price is $90.61

In conclusion

While the use and sale of Marijuana is still prohibited in several states, the legalization of marijuana is gaining more acceptance in the general public. Thus, intelligent investors should take advantage of this growing industry. Marijuana ETFs provide investors a broad exposure to a diversified portfolio of marijuana equities. Therefore, the six marijuana exchange traded funds mentioned above are worth a look.

20 Questions to Know If You’re Ready for Retirement

Finding the right financial advisor that fits your needs doesn’t have to be difficult. SmartAsset’s free tool matches you with fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is leally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.

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