Will Marijuana’s Biggest ETF Miss the Cannabis Rebound?

The cannabis industry has had an extremely tough couple of years. After seeing an upsurge in interest in 2018 as Canada went through the process of legalizing recreational marijuana, the reality of more open cannabis markets fell short of the hype. That sent shares of top stocks in the marijuana space sharply lower, and along with it…

top marijuana ETF ETFMG Alternative Harvest (NYSEMKT:MJ) has lost more than 60% of its value over the past two years.

Recently, though, some marijuana stocks have started to perk up again. That’s pushed shares of the Alternative Harvest ETF up 13% over the past month, but some investors fear that the cannabis-focused fund will never be able to claw back all of its losses. To understand why, you have to look at the stocks that have played the most important role in Alternative Harvest’s returns and see whether they match up with the growing leaders of the cannabis industry.

When your biggest stocks get hit the hardest

The Alternative Harvest ETF tracks an index of companies within the cannabis industry. It includes growers along with companies that are involved in supplying ancillary products and services to grow operations. It also includes companies in the pharmaceutical and tobacco arenas looking to diversify their exposure by incorporating cannabis into their business models.

Unfortunately for Alternative Harvest, the big stocks in the index haven’t been great performers in 2020. Consider the following:

  • Canopy Growth (NYSE:CGC) is down about 7% from where it started 2020. It currently makes up 10% of the fund’s assets.
  • Cronos Group (NASDAQ:CRON) gets an 8% weighting and has fallen 24% year to date.
  • Tilray (NASDAQ:TLRY) has been a particularly poor performer, dropping 63% since Jan. 1. Yet it still makes up nearly 8% of the fund.

The picture gets even grimmer when you look at some smaller players. Aurora Cannabis (NYSE:ACB) has plunged more than 80% in 2020, but it still gets a 4% weighting in the fund. OrganiGram Holdings (NASDAQ:OGI) and HEXO (NYSE:HEXO) haven’t fared much better, falling…

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