An ETF that offers clients exposure to stocks that produce medical cannabis is going to arrive in the U.K. The cannabis ETF will list on the London Stock Exchange and has an annual management fee of 0.8%. The product is being brought to market by HANetf, the company founded by Hector McNeill. His partner in this is Purpose Investments, a Canadian company that runs cannabis funds in the country.
After the German debut, HANetf announced the launch of a new cannabis ETF in London together with Canadian asset manager Purpose Investments.
The Medical Cannabis and Wellness UCITS (CBDX) will be listed on the London Stock Exchange after last week’s premiere on Deutsche Boerse.
It is the first and only ETF UCITS in Europe to give exposure to the rapidly expanding medical cannabis industry. CBDX is domiciled in Ireland and registered for sale in Italy.
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Listing of cannabis ETF in London indicates growth in the industry
The listing of the cannabis ETF in London allows U.K. investors to take exposure to the fast-growing medical cannabis industry with a transparent, diversified and selected basket of stocks closely related to cannabis and hemp.
Currently, 28 European countries have regulations of some kind regarding medical cannabis, while the U.K. is the largest producer and exporter of medical cannabis in the world.
In 2018 the world market for medical cannabis was worth $13.4 billion. Experts estimate a growing market that is expected to reach a value of $148 billion in 2026, showing a compound annual growth rate (CAGR) of 26.4%.
“I congratulate HANetf and Purpose Investments on the launch of their cannabis ETF in London, the first of Purpose Investments on the London Stock Exchange,” said Ivan Gilmore, Head of Exchange Traded Products & Global Product Development at the London Stock Exchange. “With the growing popularity of the ETF market and passive investment strategies, innovation is central to giving investors the opportunity to choose and diversify their portfolio.”
Gilmore stated that the expansion of products and asset classes available through ETFs is a positive growth trend.
“The London Stock Exchange is a leading ETF trading venue in Europe and will continue to work with market participants to bring new issuers or innovative funds to the market,” added Gilmore.
Purpose Investments uses prior knowledge to help launch the cannabis ETF in London
Purpose Investments is a Canadian asset management company with more than 8 billion (CAD) of assets under management as of Dec. 2019, spread across many ETFs and mutual funds.
Before launching the cannabis ETF in London, in 2017, Purpose Investments launched a cannabis fund in Canada called the Purpose Cannabis Opportunities Fund and has gained in-depth knowledge in this high-growth industry.
“Canada has been the forerunner of the medical cannabis industry and we are delighted with the opportunity to team up with HANetf to bring what we have learned from our Purpose Cannabis Opportunities Fund (MJJ) to Europe. The cannabis industry is still at the beginning of a growth phase that will last several years and there will be great opportunities for innovation and new discoveries,” said Som Seif, CEO of Purpose Investments.
Medical cannabis thematic sub-sectors
Replicating the Medical Cannabis and Wellness Equity Index provided by the global provider of Solactive indices, the launch of the cannabis ETF in London includes listed companies whose business is related to the medical cannabis, hemp and CBD sectors in 9 thematic sub-sectors:
- Manufacturers and suppliers of medical cannabis
- Biotech companies focused on CBD
- Hydroponic equipment suppliers
- Companies of medical cannabis consumer products
- Companies active in the rental of facilities for medical cannabis growers
- Software solutions for medical cannabis manufacturers
- Companies that invest in medical cannabis in particular
- Suppliers of hemp and CBD-based consumer goods
- Service providers, including equipment, production, and processing
Components are screened through a detailed legal due diligence process and only the securities of companies listed on major exchanges, such as NYSE, Nasdaq, and TSX, are included. The bottom is equipped with a complete physical replica and has a TER of 80 basis points.
“We are happy to be the first company to list a medical cannabis product on the London Stock Exchange. This expands the range of funds dedicated to long-term and highly innovative topics that are on the HANetf platform. We continue to work with new partners to help them bring their thematic strategies to European stock exchanges and investors in general,” said Hector McNeil, co-founder, and co-CEO of HANetf.
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