As far as Exchange Traded Funds (ETFs) that have garnered retail investor demand in recent years, few have had the pull that Horizons Medical Marijuana Life Sciences ETF (TSX:HMMJ) has had on Canadian investors.
This ETF tracks the broad spectrum of publicly traded cannabis stocks, primarily located in Canada. As far as broad sector-specific exposure goes, this ETF gives the cannabis aficionado broad diversification at a reasonable fee, given the global nature of the listings covered in this ETF.
As I have commented on in the past, I do believe the broad sector will continue to vastly underperform relative to the growth expectations which are built into most pot producers’ stock prices.
Despite a sector-wide drop of 70-90% for most cannabis producers since the early 2019 peak, this underperformance is largely fundamental and based on the admission that the valuations investors were placing on these speculations (not investments) were out of touch with reality, across the board.
Even the largest players in the cannabis sector have begun shedding square footage, laying off employees, and forgoing capital investments in new product development as demand for the commodity has failed to materialize.
This has absolutely nothing to do with the COVID-19 pandemic and everything to do with a previously overhyped commodity with terrible fundamentals and calculations which continue to make no sense. Other than being a short play, there is no angle here for a long-term investment at anything close to these levels today.
Invest wisely, my friends.
