The growing pot industry not only has a lot of fragmentation and many stocks to choose from, but it also has a lot of volatility. If you want to invest in pot and don’t want to put all your eggs in one basket, one option might be the Horizons Marijuana Life Sciences IDX ETF (TSX:HMMJ). The fund will provide you with a more balanced pot portfolio and would have minimized your losses in the past month.
Aurora Cannabis Inc (TSX:ACB) has dropped 30% in the last month, Canopy Growth Corp (TSX:WEED) has declined 29% and Aphria Inc (TSX:APH) has lost 27% of its value. By comparison, the Horizons ETF has declined just 24% during this time. Although this does not seem like a big amount, when dealing with thousands of dollars it can easily make a big impact on your holdings.
The EFT charges a management fee of just 0.75%, which allows investors to enjoy a diversified pot portfolio without paying a lot to do so.
Investors will still be able to enjoy the benefits of how the big three do as over one-third of the fund’s holdings are in Canopy Growth, Aurora, and Aphria. However, investors looking for stability will have to trade off some returns in the process. While Aurora’s stock has grown more than 230% since April, which is when the ETF began trading on the TSX, the fund’s 65% returns seem almost mortal in an industry where we’ve seen supernatural growth.
The ETF can also help those investors unsure of which cannabis stock to invest in while still taking advantage of the strong growth that pot stocks have enjoyed so far, which will likely continue as we inch closer towards legalization this summer.