The First US-Listed Marijuana ETF Ignites Today
The first marijuana exchange traded fund to list on a U.S. exchange debuted Tuesday with the launch of the ETFMG Alternative Harvest ETF (NYSE:MJX).
Previously, the ETFMG Alternative Harvest ETF was known as the Tierra XP Latin America Real Estate ETF, a fund dedicated to high-yielding real estate investments in Latin America. Earlier this year, ETF Managers Group LLC announced it would be changing the fund's investment objective from Latin American real estate to marijuana.
“MJX is designed to replicate the Prime Alternative Harvest Index, which tracks companies likely to benefit from the increasing global acceptance of various uses of the cannabis plant,” according to a statement. “This includes treatments from innovative medicinal breakthroughs involving the plant’s unique properties — the result of years of significant research by the global biotech and pharmaceutical community.”
More On The Marijuana ETF
The ETFMG Alternative Harvest ETF's underlying index, the Prime Alternative Harvest Index, is a recent creation.
“The Prime Alternative Harvest Index has been created to provide investors with a product that enables them to take advantage of both event-driven news and long-term trends in the cannabis industry as well as the industries likely to be influenced by the medicinal and recreational cannabis legalization initiatives taking place in many locations globally,” according to Prime Indexes.
The index is cap-weighted and none of its components exceed weights of 6.1 percent. Familiar names in the benchmark include Altria Group Inc. (NYSE:MO), Phillip Morris International Inc. (NYSE:PM), British American Tobacco Plc (NYSE:BATS) and Vector Group Ltd. (NYSE:VGR).
A Diverse Approach
MJX is a global ETF: its holdings hail from the U.S. and beyond. Canada and the U.S. combine for three-quarters of the ETF's geographic exposure, but six other countries are represented.
The ETF features exposure to five sectors, with health care and consumer staples combining for 81 percent of its weight.
MJX charges 0.75 percent per year, or $75 on a $10,000 investment.
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