Since bottoming in December, several pot stocks have almost doubled in 2019. This also appears to be the case for pot index funds and ETFs.
Cannabis stocks are currently one of the most popular investments across the globe, and most investors are trying to look at how best they can capitalize on the growing trend of legalization of marijuana.
Pot Index Fund: AdvisorShares Pure Cannabis
Although some investors have already picked leading marijuana stocks, others need a little more help. For those willing to bet on the marijuana industry through an ETF, then ETFMG Alternative Harvest ETF (NYSE:MJ) will be the best option, especially for US investors.
Alternative Harvest ETF currently has over $1 billion in assets under its management, which demonstrates the burgeoning demand for marijuana ETFs.
But a new competitor may be about to change things up in the marijuana investing game. AdvisorShares Pure Cannabis (NYSE:YOLO) is looking to take over the pot index fund as an alternative cannabis ETF.
Although the AdvisorShares ETF began trading on the NYSE ARCA exchange on April 17, it is already creating a lot of interest from investors. Alternative Harvest sees a shares volume of approximately 1 million per day compare to AdvisorShares, which shows roughly 275,000—hardly an inspiring right now. AdvisorShares has approximately $15 million in assets under its management, but the amount this new marijuana ETF is receiving is quite promising.
AdvisorShares Investment Model
AdvisorShares differs from other pot index funds in terms of its investment model. AdvisorShares has an active approach when it comes to the choice of marijuana stocks; a team of analysts and the portfolio manager, Dan Ahrens, choose companies that they believe can perform better in the present environment.
The ability to adjust its portfolio quickly enables this ETF to respond faster to changes in the growing cannabis market compared to index-driven ETFs such as Alternative Harvest. As soon as new cannabis stocks are available to the public, AdvisorShares Pure Cannabis adds them to its portfolio. Most marijuana ETFs wait for quarterly rebalancing to add any new companies.
Finding a custodian has been a challenge for funds dealing in marijuana stocks because of the complex framework governing marijuana in the US. However, AdvisorShares has enlisted Bank of New York Mellon as its custodian.
There are other top pot index funds and ETFs to consider investing in for marijuana stocks. Happy hunting!
Featured image: DepositPhotos @ singkham