Article by Clare O’Hara, Globe and Mail
Investors for the first time will be able to purchase exchange-traded funds to bet against pot stocks – or alternatively, double down on a wager that the cannabis sector is about to move higher.
Horizons ETF Management Canada Inc., the provider of the world’s first marijuana-focused ETF – the Horizons Marijuana Life Sciences Index ETF – received regulatory approval on Tuesday to launch two new leveraged pot ETFs this Friday on the Toronto Stock Exchange.
Leveraged ETFs – also known as “double ETFs” – typically aim to deliver two or three times the return on their stated index, while the inverse sees profits when returns on an index decline. These products carry a higher risk rating than typical ETFs.
Horizons ETFs is the only provider of leveraged ETFs in Canada, with 25 leveraged funds on its shelf. The funds will exist within its existing BetaPro fund lineup, and carry a management fee of 1.45 per cent.
The BetaPro Marijuana Companies 2x Daily Bull ETF (HMJU) and BetaPro Marijuana Companies Inverse ETF (HMJI) both will track the North American MOC Marijuana Index, which in turn tracks the daily performance of a basket of North American publicly listed companies with significant business activities in the marijuana industry.
“There is significant demand from investors to ‘short’ marijuana stocks because they think it is oversold,” said Mr. Hawkins, president and CEO of Horizons. “We are in the business of providing liquid trading opportunities to the marketplace with our Betapro lineup and these products are going to complement that.”
HMJI will aim to provide investors with results that correspond to one times (100 per cent) the inverse (opposite) of the daily performance of the index, while HMJU will correspond to two times (200 per cent) the daily performance of the index.