Made in America: AdvisorShares Issues US Based Cannabis ETF

Marijuana Supply in Illinois

Cannabis investors are finally getting an investment vehicle and opportunity they have been waiting for. Today (Wednesday, September 2nd ), will be the first day of trade for AdvisorShares Pure US Cannabis ETF (Ticker: MSOS). MSOS is the first and only US-listed active ETF dedicated exclusively to US based cannabis companies, including multi-state operators (MSOs).

AdvisorShares is expanding their cannabis investment strategy with their second offering in this space, having launched the Advisor Shares Pure Cannabis ETF (Ticker: YOLO) on April 18, 2019 focused on both foreign and domestic equity securities.

Dan Ahrens, AdvisorShares COO is the portfolio manager of MSOS and YOLO, with years of experience in navigating highly regulated markets including cannabis. In a recent video, he shared that he and his teams’ expertise will be key in managing risk, by active selective stock picking inside the ETF. This contrasts with a passive strategy which blindly follows an index of stock (usually market cap weighted).

AdvisorShares’ active management will allow the investment team to adjust its portfolio quickly, which Ahrens claims is a clear strength when investing in a volatile market featuring relatively smaller (as well as new and upcoming) stocks like the cannabis market. An ETF solely focused on US-based equities meets a strong demand from investors:

“We believe that cannabis has plenty of upside potential on its own. But the US represents the best untapped market for cannabis investing. The Canadian market remains a small fraction of the size of the US cannabis market. Many people think it can be like investing in alcohol at the end of prohibition.” – Dan Abrams, COO, AdvisorShares

As the US cannabis market is a growth industry, Ahrens sees future merger and acquisition activities as a potential benefit to the funds performance as the market matures. Here is a full list of the ETFs’ current portfolio:

The initial portfolio includes favorites and most profitable firms like Curaleaf and Trulieve, and well-known mid-range performers like Charlottes Web, and CGDMD.  AdvisorShares has also included small exposure to companies like Akerna and NewAge, so more information will be sought out as to their prospective room for growth in the future.

Investors should take note that according to the funds’ prospectus, the fund aims to invest at least 80% of its net assets into securities of companies that derive at minimum 50% of their net revenue from the marijuana and hemp business in the United States and in derivatives that have similar economic characteristics.

The fund will consist of exchange-listed equity securities, including common and preferred stock, of mid- and small-capitalization companies.  The investment team will also seek out firms in “cannabis and hemp-related industries”, which includes verticals like pharmaceuticals, REITs, finance and even building materials – a variety of companies using any part of the plant for commercial use.

Surprisingly, the index fund does not guarantee full exposure specifically to the cannabis industry as it will concentrate at least 25% of its investments in the pharmaceuticals, biotechnology, and life sciences industry verticals within the health care sector. The Fund is non-diversified and may change its holdings accordingly to best fit the overall investment strategy.

 AdvisorShares will host a series of investor webinars this week providing an overview of their cannabis investment strategies, detailed discussions about MSOS, and feature additional industry guests.  Capital 10x will continue to keep a keen eye on this ETF and other cannabis investment vehicles as this industry continues to develop.

MSOS ETF Highlights

US Cannabis Focus

The US cannabis market is the largest in the world, and producers are well known for innovative products and a large-scale cultivation.

Growth Opportunities

With cannabis securities in multiple industries including medical, pharmaceutical, hydroponics and other firms there are great growth opportunities as the market evolves.

Active Management

The US cannabis marketplace is constantly evolving and innovating, creating new products and companies.  MSO’s portfolio manager can adjust the portfolio quickly and take advantage of opportunities more quickly than a passive index-based fund.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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Joe
Joe
September 7, 2020 7:18 am

Reads too much like a public relations / marketing / promotional piece. Maybe that’s what it is supposed to be, but my impression of what you say Capital10X provides is more hard hitting.