Funds focused on the cannabis / hemp industry form a companion theme of the equity selection 'Cannabis Meanderings'
Unsurprisingly, the top selections of every ETF include the major operators, since concentration in the industry has narrowed the investment opportunities
However, the notable performance and volatility spread across the ETF selection signals key factors of differentiation
- Funds specialized in US-based Multi-State Operators (MSOs) in the cannabis industry come out on top, by a wide margin over the long run
- Funds invested in Global MSOs - essentially a mix US-Canadian cannabis producers - are disappointing and their future performance seems to hinge on improvement in the Canadian industry
- Funds seeking diversification to provide a balanced outlook are invested in the cannabis eco-system, to include finance, real estate and healthcare hemp applications, with varying degrees of success; the strategy hinges on actual asset selection, apart from cannabis producers
From an investor seeking diversification in the cannabis / hemp industries, the market has been favoring 'pure' US MSOs over the past 12 months at the cost of extreme price volatility
As argued in "Cannabis - Hope Springs Eternal", investors positioning themselves for flexibility in the US regulatory framework may benefit from more diversified cannabis/hemp ecosystems such as