Canada Gets World's First Inverse, Leveraged Cannabis ETFs

Already one of the world's largest markets in terms of sheer number of cannabis exchange traded funds, Canada is breaking new ground as the home to the world's first inverse and leveraged marijuana ETFs.

What To Know

Horizons ETFs Management (Canada) Inc. said it's preparing to launch a leveraged marijuana ETF and an inverse cannabis fund on Friday.

The BetaPro Marijuana Companies 2x Daily Bull ETF HMJU and the BetaPro Marijuana Companies Inverse ETF HMJI are expected to debut Friday, May 24.

The BetaPro Marijuana Companies 2x Daily Bull ETF will look to deliver double the daily inverse performance of the North American MOC Marijuana Index.

“The Index tracks the daily performance of a basket of North American publicly listed companies with significant business activities in the marijuana industry,” according to Horizons.

Why It's Important

The BetaPro Marijuana Companies Inverse ETF is designed to deliver the daily inverse performance of the North American MOC Marijuana Index, so if that index declines by 1 percent on a given day, the new Horizons ETF should rise by 1 percent.

Horizons offers 10 double-leveraged bullish ETFs, 10 double-leveraged inverse ETFs and three non-leveraged inverse ETFs.

The issuer is also behind several well-known marijuana ETFs, including the Horizons Marijuana Life Sciences Index ETF HMMJ, Horizons Emerging Marijuana Growers Index ETF HMJR and the Horizons US Marijuana Index ETF HMUS.

The North American MOC Marijuana Index “tracks the leading cannabis stocks operating in the United States and Canada. Constituents must have a business strategy focused on the marijuana or hemp industry, and are required to meet our minimum trading criteria,” according to the index provider.

Top components in that index include Canopy Growth Corp. CGC, Aurora Cannabis Inc. ACB and Cronos Group Inc. CRON.

There are no leveraged marijuana ETFs trading in the U.S. The ETFMG Alternative Harvest ETF MJ is the largest cannabis ETF in the U.S., while the AdvisorShares Pure Cannabis ETF YOLO is the newest. Just over a month old, YOLO has $58.67 million in assets under management.

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