Tuesday , 2 June 2020

Cannabis Central: A Ranking Of Marijuana ETF Performances In August – Who Was #1?

By Lorimer Wilson, editor of munKNEE.com – Your KEY to making money!

In an recent article I posted on TalkMarkets as an exclusive (see here) I identified 12 cannabis or cannabis-related ETFs suggesting that such an approach to investing in the burgeoning marijuana sector was the best way to go. That being said, not all such ETFs perform equally well given their constituents and below is the performance of each in August ranked from best (-3.5%) to worst (-16.0%).

1. Advisor Shares VICE ETF (Nasdaq:ACT) -3.5%

ACT believes that investing in select alcohol and tobacco companies and restaurant/entertainment businesses will provide continued growth and long-term performance across all types of market environments and that the 51.6% of cannabis-related companies in the ETF will provide considerable upside potential to complement the historically resilient characteristics of alcohol and tobacco. The ETF:

  • is actively managed,
  • has an expense ratio of 0.75%,
  • a very respectable beta of 0.76
  • and is broadly diversified with its 30 constituents (see constituents here) allocated as follows:
    • Cannabis related: 30.3%
    • Alcohol: 24.0%
    • Restaurant & Entertainment: 16.1%
    • Tobacco with cannabis exposure: 13.7%
    • Alcohol with cannabis exposure: 7.6%
    • Tobacco: 8.2%

ACT was the best performing marijuana/marijuana-related ETF during the month of August declining “only” 3.5%. While it was a loss, the average marijuana/marijuana-related ETF declined 11.8% performing just slightly better than the average decline of 12.7% for the 9 marijuana indices that track the performance of the marijuana sector.

2. Evolve U.S. Marijuana ETF (NEO:USMJ) -10.2%

USMJ was the first ETF to invest in the U.S. marijuana industry and is:

  • actively managed,
  • consists of 39 constituents (see list here) from the U.S. (51.29%) and Canada (44.34%) with the remaining 4.27% headquartered in the U.K. and elsewhere. It is slightly diversified in that 12.16% are involved in ancillary-related businesses with 43.25% being large cap and 42.75% in emerging businesses.
  • has an expense ratio of 0.75% and
  • has a beta of 1.8.

USMJ was launched in April of this year and is listed on NEO, the relatively new Canadian exchange. In August the ETF declined 10.2%.

To put things in perspective, the average return of the 22 non-penny stocks (i.e. trading for $5+/share) representing 6% of all marijuana stocks was a decline of 18.5%. These stocks included such well-known names as:

  • Canopy Growth (TSX:WEED) down27.3%,
  • Cronos Group (TSX:CRON) down 19.2%,
  • Tilray (Nasdaq:TLRY) down 37.1%,
  • OrganiGram (TSX:OGI) down 28.4%;
  • Neptune Wellness (TSX:NEPT) down 28.7% and
  • Trulieve Cannabis (CSE:TRUL) down 24.6%. 

Aphria (TSX:APHA; NYSE:APHA) was one of only 3 non-penny marijuana stocks that went up in August and it went up by a respectable 17.2%.

Below is the August performance of the remaining 10 marijuana ETFs in descending order:

  1. Purpose Marijuana Opportunities ETF (NEO:MJJ) -10.3%
  2. Horizons US Marijuana Index ETF (NEO:HMUS) -10.3%
  3. Advisor Shares Pure Cannabis ETF (NYSE:YOLO) -12.7%
  4. Horizons Marijuana Life Sciences ETF (TSX:HMMJ) -12.9%
  5. Evolve Marijuana Fund ETF (TSX:SEED) -13.1%
  6. Innovation Shares The Cannabis ETF (NYSE:THCX) -13.3%
  7. Amplify Seymour CNBS Cannabis ETF (NYSE:CNBS) -13.5%
  8. Cambria Marijuana Industry Fund ETF (CBOE:TOKE) -13.6%
  9. ETFMG Alternative Harvest ETF (NYSE:MJ) -14.5%
  10. Horizons Emerging Marijuana Growers ETF (NEO:HMJR) -16.0%

For the record, below is how the 2 leveraged marijuana ETFs fared in August:

  • Horizons Beta Pro Marijuana 2X Daily Bull ETF (TSX:HMJU) -30.5%
  • Horizons Beta Pro Marijuana Inverse ETF (TSX:HMJI) +12.2%

There you have it! Which ETF is right for you?