This ETF holds primarily Canadian cannabis and related companies with additional exposure to the American and U.K. markets. Surprisingly, it offers a cash dividend—but not in the way you’d think.
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HORIZONS MARIJUANA LIFE SCIENCES ETF $17.12 (Toronto symbol HMMJ; Units outstanding: 45.9 million; Market cap: $785.8 million; TSI Cannabis Quality Rating (CQR): ;www.horizonsetfs.com) invests in North American firms that are legally involved in the cannabis industry.
The fund tracks the North American Marijuana Index, which weights its stocks by their market cap and sets an upper limit of 10% for any one stock. Canadian companies make up roughly 80% of the ETF’s portfolio, the U.S., 12%, and the U.K., 8%. The fund invests in cannabis growers and cultivators as well as bio-pharmaceutical companies and support firms such as lighting technology and fertilizer companies.
Despite its 64 different stocks, the ETF’s holdings are still highly concentrated in growers: the top six producers, alone, make up almost 50% of the overall assets.
The top 10 holdings are Aurora Cannabis (Canada, 10.6%), Canopy Growth (Canada, 10.5%), Tilray Inc. (Canada, 9.6%), %), Cronos Group (Canada, 9.3%), GW Pharmaceuticals (U.K., 7.4%), Aphria (Canada, 7.0%), Scotts Miracle-Gro (U.S., 6.1%), Charlotte’s Web Holdings (U.S., 5.6%), Hexo Corp. (Canada, 3.9%) and Organigram Holdings (Canada, 3.0%). The fund is re-balanced each quarter.
The ETF launched in April 2017. It charges a relatively high MER of 0.75%, but has a reasonable size. An average of $19 million in units trade daily, which provides ample liquidity.
The fund has gained 16.2% since the start of this year, while the broad-based S&P/TSX Composite Index rose 15.2%.
Most of the stocks that the ETF holds don’t pay dividends. However, Horizons earns money by lending those stocks to short sellers. The short sellers then sell them, hoping to buy them back later at a lower price.
Thanks to those income source, the ETF has now paid eight variable quarterly distributions since October 2017. The trailing 12-month total payment of $1.07 yields a high 6.2%. However, cash inflows from short sellers are highly volatile and the ETF’s distributions (and yield) could suddenly drop.
The Horizons Marijuana Life Sciences ETF has a 3-Leaf Cannabis Quality Rating (CQR).
For investors who want exposure to marijuana markets, this ETF cuts the risk of investing in individual cannabis stocks. That also means it holds stocks that we do not like. The ETF is a speculative buy for aggressive investors who want exposure to the marijuana industry.
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Privacy Policy and Terms of Use
The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
This privacy policy is applicable to all TSI Network Visitors, Clients, Employees, Suppliers, Web sites, Management, and all other interested parties. Any links to or from our site are not covered by this policy. We encourage you to read the privacy policies of every site that you visit.
The privacy of the site/store visitor is very important to TSI Network, and is respected at all times. The information we receive from customers helps us to personalize and continually improve your online experience at TSI Network.
We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
We store subscriber and password files containing personal information securely. These files are stored in secure areas that are not accessible to the general public. We are always working to ensure the security of your personal information.
We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
What personal information do we collect?
The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
Information You Give Us: We receive and store any information you enter on our website or give us in any other way through sign-up forms or ordering forms for publications and services. You can choose not to provide certain information, but then you might not be able to take advantage of many of our services and features. We use the information that you provide for such purposes as responding to your requests, customizing your web browsing experience for you, improving our website, and communicating with you.
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Does TSI Network Use the Information It Receives?
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Changes to this Policy
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TSI Network may revise this Policy from time to time.
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Information presented on this web site or contained in our publications is not an offer, nor a solicitation, to buy or sell any securities referred to on the web site or in the publications. The material is general information intended for recipients who understand the risks associated with an investment in any securities referred to in the publications or on this web site. The Successful Investor has made no determination regarding whether an investment, course of action, or associated risks are suitable for the recipient.
