Best Marijuana ETFs for Q3 2021
Marijuana exchange-traded funds (ETFs) provide investors with exposure to equities of companies that engage in the cultivation, distribution, and sale of marijuana and related products. Products of marijuana companies include dried flowers, oils, seeds, edibles, and more. Still prohibited as an illegal substance in many parts of the world, marijuana is gaining wider acceptance for both medicinal and recreational purposes. Support for continued legalization is growing, and cannabis is now a multi-billion-dollar industry. Marijuana ETFs are a straightforward way for investors to gain exposure to a diversified basket of marijuana equities and profit from this growing industry.
Key Takeaways
- Marijuana equities have significantly outperformed the broader U.S. equity market over the past year.
- The ETFs with the best 1-year trailing total return are CNBS, YOLO, and THCX.
- The top holdings of these ETFs are sponsored ADRs of GW Pharmaceuticals PLC, and the common stock of Village Farms International Inc. and Aphria Inc., respectively.
There are 6 marijuana ETFs that trade in the U.S., excluding inverse and leveraged ETFs, as well as funds with less than $50 million in assets under management (AUM). The marijuana sector, as measured by The Marijuana Index (North America), has dramatically outperformed the broader market with a total return of 160.3% over the past 12 months compared to the S&P 500’s total return of 27.5%, as of March 2, 2021. The Marijuana Index is an equal-weighted index, which means that it may significantly overweight small-cap equities relative to a cap-weighted index like the S&P 500. The best-performing marijuana ETF for Q2 2021, based on performance over the past year, is the Amplify Seymour Cannabis ETF (CNBS). We examine the 3 best marijuana ETFs below. All numbers below are as of March 3, 2021.
On March 31, 2021, New York passed a law legalizing recreational cannabis, expanding medical use, and decriminalizing possession of small amounts of marijuana, among other measures. Not all of these provisions will go into effect immediately and there is not yet a timeline by which all these measures will be fully implemented.
- Performance over 1-Year: 188.7%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 0.32%
- 3-Month Average Daily Volume: 246,241
- Assets Under Management: $138.4 million
- Inception Date: July 23, 2019
- Issuer: Amplify
CNBS is an actively managed ETF that provides exposure to the North American cannabis industry by investing at least 80% of its assets in securities of companies that generate 50% or more of their revenue from the cannabis and hemp ecosystem. The majority of the fund’s 26 holdings operate within either the cultivation and retail or agricultural technology sectors of the cannabis market. But pharmaceuticals and biotechnology companies also garner a sizeable representation. It follows a blended strategy investing in a mix of growth and value stocks of mostly large-cap companies. The fund’s top three holdings include sponsored ADRs of GW Pharmaceuticals PLC (GWPH), a developer of cannabinoid prescription medicines; Aphria Inc. (APHA:TSE), a provider of medical marijuana products; and Canopy Growth Corp. (CGC), a medical marijuana producer.
- Performance over 1-Year: 173.7%
- Expense Ratio: 0.75%
- Annual Dividend Yield: 1.33%
- 3-Month Average Daily Volume: 698,008
- Assets Under Management: $427.1 million
- Inception Date: April 17, 2019
- Issuer: AdvisorShares
YOLO is an actively managed ETF that seeks long-term capital appreciation by investing in both domestic and foreign cannabis equities. The fund is heavily weighted to large-cap equities primarily in the U.S. and Canada. Its holdings span multiple areas of the cannabis market, including agriculture, biotechnology, pharmaceutical, and more. YOLO is designed to take advantage of growth in the cannabis industry over the long-term and may be ideal for a buy-and-hold portfolio. Its top three holdings include Village Farms International Inc. (VFF:TSE), a grower of tomatoes, bell peppers, cucumbers, and cannabis; sponsored ADRs of GW Pharmaceuticals; and Aphria.
- Performance over 1-Year: 118.1%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 2.14%
- 3-Month Average Daily Volume: 385,533
- Assets Under Management: $185.5 million
- Inception Date: July 9, 2019
- Issuer: Innovation Shares LLC
THCX tracks the Innovation Labs Cannabis Index, which consists of global companies engaged in the legal cannabis, hemp, or CBD-based pharmaceutical, consumer product, and wellness markets. The ETF was designed to provide a convenient way for investors to gain exposure to a basket of stocks expected to benefit from growth in the hemp and legal marijuana industries. The majority of the fund’s holdings are based in the U.S. and Canada. It is heavily weighted to the pharmaceuticals and biotech sector, and follows a blended strategy of investing in a mix of value and growth stocks. The fund’s top three holdings include Aphria; Amyris Inc. (AMRS), a producer of chemical products for a range of markets, such as flavors and fragrances, cosmetics ingredients, and pharmaceuticals; and Village Farms International.
The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
