Horizons ETFs Management (Canada) Inc. on Monday new developments with its suite of Marijuana-focused ETFs. This includes the listing of futures contracts on the Horizons Marijuana Life Sciences Index ETF (HMMJ) and the filing of a preliminary prospectus to launch leveraged, inverse and inverse leveraged ETFs that provide exposure to Canadian-listed marijuana companies.
Futures on units of HMMJ began trading today on the Montreal Exchange.
Futures contracts on HMMJ will be available with quarterly expiration dates, in January, March, June and September — initially extending to a June 2019 expiry.
“We view the formal availability of futures on HMMJ as recognition by the Canadian investor marketplace that HMMJ is the key benchmark for marijuana investing in Canada,” says Steve Hawkins, president and co-CEO of Horizons ETFs, in a statement. “For us, this further legitimizes marijuana-equity investing and HMMJ as the key way to get broad index exposure to this rapidly growing sector.”
Horizons ETFs also filed a preliminary prospectus last week to launch three new ETFs that provide leveraged, inverse and inverse leveraged exposure to Canadian-listed marijuana companies as represented by the Solactive Canadian marijuana companies index (SCMCI). The preliminary filings are subject to change and subject to regulatory approval.
The SCMCI is intended to track the price movements in shares of Canadian companies which are mainly active in the marijuana industry. The index is published in Canadian dollars.
These ETFs will be branded under Horizons ETFs’ family of tactical BetaPro ETFs. They will trade on the Toronto Stock Exchange.
The proposed investment objective for each respective ETF is as follows:
BetaPro Canadian Marijuana Companies 2x Daily Bull ETF (HMJU) seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to two times (200%) the daily performance of the SCMCI.
BetaPro Canadian Marijuana Companies -2x Daily Bear ETF (HMJD) seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to two times (200%) the inverse (opposite) of the daily performance of the SCMCI.
BetaPro Canadian Marijuana Companies Inverse ETF (HMJI) This seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to one times (100%) the inverse (opposite) of the daily performance of the SCMCI.
“Given the underlying volatility of this sector, we believe there is demand from certain sophisticated Canadian investors to take on more risk using leveraged ETFs to attempt to generate potentially higher short-term returns — very much like they have done with gold mining stocks,” said Hawkins.
“Shorting marijuana stocks in particular is an expensive and complex process. If used appropriately, inverse Marijuana ETFs could be a potentially more liquid and easier way for investors to get short exposure to Canadian-listed marijuana stocks while limiting their risk to what they invested,” said Hawkins. “It is important to note that these ETFs certainly wouldn’t eliminate many of the risks investors face when shorting marijuana stocks, which includes being subject to the high cost of borrowing marijuana stocks.”