Investors took a big hit of the marijuana-related exchange traded fund, funneling millions of dollars into the new ETF after a little over a week of trading.
The ETFMG Alternative Harvest ETF (NYSEArca: MJX) has already seen assets surge to $256.8 million from its initial $5.7 million on December 26, its first trading day. Over the past week, MJX has also gained 10.8%.
Coincidentally, the debut of MJX happened just days before California opened stores for legal sales of recreational marijuana. Recreational marijuana use was legal in the largest state throughout 2017, but the opening of retail outlets dedicated to legal weed sales was prohibited until the start of 2018.
“There was obviously a lot of pent-up demand,” Sam Masucci, chief executive officer of Summit, ETF Managers Group LLC, which runs the exchange traded fund, told Bloomberg. “People want to play the theme and the theme is simple: the growing acceptance of marijuana.”
If MJX may maintain its current rate of investment interest among investors, the Alternative Harvest ETF could grow to $1 billion in assets under management in less than two months, which would make it the second-fastest ETF to hit $1 billion, according to Bloomberg.
MJX country weights include Canada 41%, US 34%, UK 9%, Hong Kong 3%, Italy 3%, Denmark 3%, Japan 3% and Sweden 3%. Top component holdings include Cronos Group 8.3%, Aurora Cannabis 7.2%, Medreleaf 6.9%, Canopy Growth 6.5% and Canntrust Holdings 5.0%.
Potential investors should be aware that While MJX’s underlying index may cover businesses that are legally engaged in activities related to cannabis, the benchmark does not include those that directly cultivate, produce or distribute marijuana or products derived from marijuana, unless such activities become legal under U.S. federal and state laws.
Recreational pot is legal in eight states plus Washington D.C. but still remains illegal on the federal level, which has created an uncertain situation that has prevented many pot stocks from listing in the U.S. However, Canada plans to legalize the drug nationally by July, contributing to Canada’s large weight in the ETF’s portfolio.
“California legalizing recreational marijuana use has definitely put the spotlight on the sector,” Steve Hawkins, president and co-CEO of Horizons ETFs Management Canada Inc., which also offers the Canada-listed Horizons Medical Marijuana Life Sciences ETF, told Bloomberg. “It has certainly boosted the long-term prospects of cannabis stocks, as well as HMMJ, and we are optimistic this upward trajectory will continue.”
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