The S&P/MX International Cannabis Index is up 61% year-to-date, highlighting strength in the cannabis sector. The Global X Cannabis ETF (POTX) which is up a huge 80% YTD.
POTX seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Cannabis Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) based on the securities in the underlying index.
The underlying index is designed to provide exposure to exchange-listed companies that are active in the cannabis industry, as defined by Solactive AG, the provider of the underlying index. With an expense ratio of 0.50%, POTX is 15 basis points below the category average.
Overall, POTX gives investors access to:
- High Growth Potential: POTX enables investors to access a basket of high growth potential companies from across the cannabis industry.
- An Unconstrained Approach: POTX’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
- ETF Efficiency: In a single trade, POTX delivers targeted access to dozens of companies with significant exposure to the cannabis theme.
- Performance: The fund is outpacing the S&P/MX International Cannabis Index by roughly 20%.
No Signs of Slowing Down for Thematic ETFs
As the ETF space continues to grow (currently, over $7 trillion globally as of February 19, according to Statista), thematic funds keep growing along with it. Funds like POTX are a big part of it.
“Allocation into ETFs — or exchange-traded funds — has continued to rise this year despite the volatility brought about by the pandemic. And the top performing funds are dominated by one theme: weed,” a CNBC article noted. “In fact, marijuana-focused ETFs constitute half of the top 10 best performers in the first two months of 2021 according to data provided by Refinitiv.”
“ETFs are investment funds that can be easily traded throughout the day on exchanges. They attracted record investment of $7.99 trillion worldwide by the end of 2020, according to research consultancy ETFGI,” the article added further. “And investors’ interest in ETFs shows no sign of slowing. A survey conducted by U.S. private bank Brown Brothers Harriman, published Monday, found that 72% of global financial advisors, institutional investors and fund managers plan to increase their ETF allocation in the next 12 months. And eight in 10 investors surveyed plan to increase their exposure to thematic ETFs.”
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