Bloomberg
A tiny fund with a 250% return wants part of the billions of ETFs
(Bloomberg) – The meteoric wave of marijuana ETFs is causing a mutual fund to join the list of those seeking to take advantage of the abundance of money flowing into the $ 6 trillion exchange-traded funds industry. Hopes for cannabis legalization in the US have increased bet on massive profit growth and boosted ETFs that track the industry to the top of this year’s leaderboard. This encouraged Foothill Capital Management’s Cannabis Growth Fund (CANNX code) to come up with ETF conversion plans. The product has raised just $ 7.4 million in assets since its inception in 2019 – despite an increase of almost 250% last year. This compares to the $ 1.9 billion of ETFMG Alternative Harvest ETF (ticker MJ), the largest pot ETF. The conversions would be an important milestone for the ETF industry, which has been gaining ground in the mutual funds market for years thanks to reduced costs, easier access and preferential tax regime. Guinness Atkinson Asset Management is scheduled to exchange two of its products for ETFs on March 26, and Dimensional Fund Advisors has also filed plans to convert some of its funds. Now, with Foothill’s Cannabis Growth joining the lineup, several analysts say it could attract more investor attention. “For some managers, this is a way to list ETFs, to enter the ETF market with hundreds of millions or billions of dollars behind you on day one,” said Ryan Sullivan, senior vice president of global ETF services at Brown Brothers Harriman. “We will see this happen for the first time in the near future.” Active managers, like these three companies that are entering the conversion process, can bring $ 100 billion in new assets to the ETF industry, according to Bloomberg Intelligence. attracted $ 1.7 billion in 2021, surpassing the total of $ 686 million in 2020. This cash rush is probably chasing the rise in industry stocks, with the list of the 10 best performing ETFs this year including three trading products. cannabis – the Global X Cannabis ETF (POTX), Cannabis ETF (THCX) and Amplify Seymour Cannabis ETF (CNBS). Since California legalized medical marijuana in 1996, there has been increasing acceptance of the plant and its derivatives in every state. Canada legalized marijuana in 2018, creating an industry dominated by companies listed on U.S. stock exchanges, attracting American investors. Hopes for legalization at the state and federal level are driving the cannabis market and triggering a wave of mergers and acquisitions, while a Democratic majority in Congress is fueling optimism for more widespread approval measures. “It looks like this government is probably more pro-legal,” said Arthur Hogan, chief market strategist at National Securities Corp. “It’s not fair, all states will have some kind of legalization, but is there likely to be federal legalization? It would certainly smooth everything out. ”For more articles like this, visit us at bloomberg.comSubscribe now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP