AdvisorShares has introduced its third actively managed cannabis ETF: the AdvisorShares Poseidon Dynamic Cannabis ETF (PSDN US) on NYSE Arca.
Emily Paxhia, Managing Director at Poseidon Investment Management.
The fund is sub-advised by Poseidon Investment Management, a California-based asset manager that has been investing in the cannabis space since 2013.
Poseidon’s managing directors Emily Paxhia, Morgan Paxhia, and Tyler Greif serve as the fund’s portfolio managers.
Emily Paxhia said: “As one of the first investment firms dedicated to cannabis investments, we believe our unique skill set and demonstrated ability to navigate this nuanced and evolving market environment has served our investors well. We feel our deep familiarity and first-hand knowledge of the cannabis industry has afforded us a discerning investment approach which we are now pleased to have universally accessible for investors through PSDN.”
Noah Hamman, CEO of AdvisorShares, added: “We are excited to partner with Poseidon and deliver their institutional portfolio management in cannabis through a fully transparent and operationally efficient ETF. We believe their established expertise, institutional pedigree, and management history adds another compelling dimension to our cannabis ETF line-up as advisors and investors conduct due diligence about allocating to this highly specialized area of the marketplace.”
The fund joins the $250m AdvisorShares Pure Cannabis ETF (YOLO US), which invests across a variety of North American cannabis-related businesses, and the $1.2bn AdvisorShares Pure US Cannabis ETF (MSOS US), which targets cannabis-related companies listed in the US. MSOS and YOLO are also both actively managed, and come with expense ratios of 0.73% and 0.75% respectively.
AdvisorShares also offers the AdvisorShares Psychedelics ETF (PSIL US), which is the only ETF in the US to provide actively managed exposure to companies developing therapeutic solutions using psychedelics. PSIL comes with an expense ratio of 0.68%.
Investment process
PSDN seeks long-term capital appreciation by investing in companies worldwide that derive at least 50% of their net revenue directly from cannabis and hemp-related activities or from providing services, products, or technology to these industries.
Eligible securities include common and preferred stock from any market capitalization segment although, given the emerging nature of the cannabis segment, the fund is expected to consist primarily of mid, small, and micro-cap firms. The fund may also participate in initial public offerings.
Eligible cannabis-related business activities include conducting medical research, developing medical treatments, manufacturing hemp products, and engaging in agricultural, real estate, or financial services enterprises. Only cannabis-related businesses that are permitted by national and local laws are selected for inclusion.
The fund may also invest up to 20% of its assets in securities of companies that, in Poseidon’s opinion, are expected to derive significant current or future revenue from cannabis-related activities or are registered with the Drug Enforcement Agency specifically for lawful marijuana research and the development of cannabis-related medical products.
Poseidon may opportunistically utilize total return swaps in order to obtain leveraged exposure to the cannabis segment up to 150% of the fund’s total assets.
The ETF comes with an expense ratio of 0.92%.