Cambria Investment Management entered the cannabis investing space on Thursday with the launch of the Cambria Cannabis ETF (TOKE) on Cboe.
The fund is actively managed, and is currently the lowest cost cannabis fund on the market with a net expense ratio of 0.42%. The other four cannabis ETFs (MJ, CNBS, YOLO, THCX) have an expense ratio range of 0.70% to 0.75%.
TOKE joins a suite of 11 other Cambria ETFs, that span across tactical, core and value strategies.
Meb Faber, Cambria co-founder and CIO, said his company was founded on the deep belief in rules-based investing, which he believes can yield better long-term results for clients.
“TOKE is our first thematic ETF, which we believe has the potential to be a long-term growth story characterized by structural and behavioral inefficiencies,” Faber said.
Faber said the fund management industry is dominated by a handful of firms with massive sales and distribution, but they believe investors are looking for original, authentic investment solutions.
“Our firm’s growth to date is a testament to the trust of our over 30,000 investors who support us, our ideas, and our research,” he said. “We’ve approached asset management a bit differently and we’re excited to continue launching innovative solutions investors care about.”
Cambria manages over $1 billion in assets under management, and investors include individuals, institutions, and registered investment advisors across its suite of ETFs.
The Case for Cannabis ETF Investing
In a recent article “The Cannabis Opportunity” published on July 19, Faber wrote that it’s an exciting time to be an investor considering the cannabis sector.
“One of the factors behind this massive investment growth is the realization that the majority of cannabis sales are still happening on the black market – in other words, despite the gains to date, the overwhelming majority of growth is still in front of us,” he wrote. “But as cannabis reform legislation continues to be enacted on the state level, and eventually the U.S. federal level, it makes sense to assume that this massive market share would rotate toward legal sales channels – meaning huge revenue growth for legal cannabis’s market leaders. And as the legal sales channels proliferate and new cannabis products are offered, new users will be willing to try cannabis, which will vastly expand the total addressable market of this industry.”
Faber said the reality is that the investment opportunity in front of us is a rarity.
“Cannabis already has an enormous and loyal consumer base,” he said. “Yet, anti-cannabis laws around the globe have muted cannabis’s free-market supply/demand dynamic. And it’s only now that meaningful reform legislation is beginning to be enacted that we’re seeing what’s possible in terms of demand and market size. As an analogy, it almost feels as though we’re witnessing a massive dam being removed, making way for the flood that’s been long pent up.”
Click here to read the ‘The Cannabis Opportunity’ article in full.