Even with returns of more than 30% in 2019, pot exchange-traded funds will start to fade as investors wake up to the realization that marijuana investing is boring, Daniel Straus, vice president of ETFs and financial products research at National Bank of Canada, tells Bloomberg News.
At least nine ETFS in the U.S. and Canada invest in cannabis stocks, and two more are seeking approval to list in the U.S.
"Typically, in a thematic area there's only room for two, maybe three, big successes and then the law of diminishing returns kicks in," said Bloomberg Intelligence analyst Eric Balchunas.
The Horizons Marijuana Life Sciences Index ETF (OTC:HMLSF -1.3%), the world's first pot ETF, pulled in more than C$100M (US$76M) just days after it started trading in Toronto in 2017; and ETFMG Alternative Harvest ETF (MJ -0.7%), added more than $200M the week after it shifted its focus from Latin American Real Estate.
Political and regulatory risks also remain risks in the U.S. because the federal government still considers marijuana an illegal substance, even though many states legalized the substance for medical uses and 11 states allow recreational uses.
Previously: Global X readies to launch pot ETF (June 10)
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