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ETF Focus: The Marijuana ETF is a buzz kill on 4/20

April 20, 2017
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Marijuana users may be celebrating the plant’s informal holiday of 4/20 on Wednesday, but marijuana investors don’t seem eager to join the party.

The only exchange-traded fund with a marijuana theme, the Horizons Medical Marijuana Life Sciences ETF












HMMJ, -1.94%










tumbled 1.8% on the day, taking the popular new fund even further from an all-time high it set on its third day of trading.

While the fund, which tracks a basket of medical marijuana-related companies, is up 4.9% from when it was first launched, on April 5, it has struggled from its early success. After hitting an all-time intraday high of $12.40 on April 11, it has shed more than 14% of its value.

Despite that, the Toronto exchange-listed ETF has been unusually popular for a new fund, particularly one within the “thematic” category, which track narrow sub-sectors of the economy.

Read: Are thematic ETFs gimmicks or smart strategic plays?

The fund has averaged daily trading volume of more than 1.3 million shares; many new funds see less than 1,000 shares traded a day. It has also pulled in more than $86.4 million in assets, a huge amount for a new fund, particularly one from a relatively small issuer. The only fund launched in 2017 to top it in asset is the PowerShares Treasury Collateral Portfolio












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which has more than $300 million in assets.

Interest in the fund has come as the marijuana industry sees blistering growth; by one estimate, it could see $50 billion in annual revenue by 2026—though some of that will come from the still-robust black market. Marijuana sales rose 30% in 2016, with roughly a fifth of the U.S. population based in states where smoking marijuana is legal.

Everything you need to know to invest in marijuana

(2:50)

Recreational cannabis is a $6 billion industry that is projected to reach $50 billion in legal annual sales by 2026. Here’s what you need to know if you’re thinking of investing in marijuana.

Read more: Happy 420! Members of Congress get two free joins today

Opinion:How investors can separate the winners from the losers in the marijuana industry


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