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Cannabis ETFs are one of the hottest areas among marijuana stocks. ETFs or exchange-traded funds have provided a solid amount of exposure for investors to take advantage of. But with this exposure comes several pros and cons. The most obvious of this is that they follow both large gains and large losses. Because of this, ETFs can either be a great tool for cannabis investors, or a great way to watch one’s portfolio go down. But, the real potential for these pot stocks comes in the long term.
What Made These Pot Stocks Drop in Value So Quickly?
Depending on where you look, the cannabis industry is positioned to see as much as $70 to $100 billion in sales within the next ten years. This means that the major ETFs could hold a large amount of these gains. For those who don’t know, an ETF is a fund comprised of certain types of stocks. In the case of the cannabis market, there are ETFs for just about everything. The most popular ones tend to track the largest pot stocks by market cap for obvious reasons. These cannabis companies are the most likely to see more gains.
But, they are also the most likely to see large losses given their exposure to the industry. Many pot stock ETFs have taken a beating in the past six months right alongside most companies in the cannabis industry. This is due to large amounts of volatility that have swept across the entire industry. Moving forward though, it seems that the market could begin to get back on track as this volatility calms down. For now, these cannabis ETFs look like they could be interesting pot stocks to watch for the foreseeable future.
The Most Popular Marijuana Stock ETF
ETFMG Alternative Harvest (MJ Stock Report) is the first ETF in the world to focus on the cannabis market. This means that it has also become the largest ETF in the cannabis industry. But, the news is not all good for this ETF as it has lost around 65% of its value in the past 12 months. This is mostly due to the large number of losses we have seen from the top down in the industry. So this recommendation is meant mostly for the future when the industry begins to get back on track.
This index tracks several of the largest pot stocks in the industry. The companies that it holds include ones that operate in cultivation, production, and distribution. ETFMG is one of the broadest ETFs in the industry as it also holds pharmaceutical-related cannabis stocks. So investors should continue to watch this ETF, but definitely keep an eye out for a breaking point when we can begin to see gains be more normalized.
Marijuana Stock to Watch Another Popular Cannabis ETF
Horizons Marijuana Life Sciences (HMLSF Stock Report) is another one of the very popular cannabis ETFs. The company has a heavy focus on strictly pot stocks as opposed to a more broad reach like the ETFMG fund. This fund is meant to give investors exposure to the largest cannabis growers and the most involved marijuana stocks within the North American market. What makes it interesting is that it is headquartered in Canada. This means that it has exposure to the majority of the largest pot stocks in the cannabis industry.
The fund currently is worth around CA$400 million which is quite substantial. But similarly to ETFMJ, the fund has shed as much as 70% of its value in the past twelve months. Given that its performance is wholly based on the performance of the underlying assets, investors should watch the top pot stocks in the industry to see where momentum is headed. With that, they can begin to find the right ETF for them.
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