Purpose Investments, a Toronto-headquartered asset manager and ETF issuer, is set to launch its first ETF in Europe, the Medical Cannabis and Wellness UCITS ETF (CBSX GR) on Deutsche Börse’s Xetra.
Som Seif, CEO of Purpose Investments.
The fund, which is being brought to market in collaboration with London-based white-label ETF provider HANetf, will be the first UCITS ETF to deliver targeted exposure to the rapidly expanding medical cannabis industry.
The medical cannabis industry has gone through a massive transformation and growth in the last two years. Medical cannabis and cannabidiol (CBD) products are used to treat conditions such as cancer, epilepsy, and chronic pain, and are now legal in over 40 countries with more countries expected to follow suit.
In Europe, there are now 28 countries with some form of medical cannabis legislation, with the UK being the largest producer and exporter of medical-grade cannabis in the world.
As of 2018, the global market size was $13.4 billion and experts forecast it to reach a value of $148bn by 2026, translating to a CAGR of 26.4%.
The fund is linked to the Medical Cannabis and Wellness Equity Index, which consists of publicly listed companies conducting legal business activities in the medical cannabis, hemp and CBD industry.
The index covers nine sub-sectors: producers and suppliers of medical cannabis; CBD-focused biotech companies; hydroponics and equipment suppliers; producers of medical cannabis consumer products; companies leasing property to medical cannabis growers; software solutions for medical cannabis producers; companies with an investment focus on medical cannabis; hemp and CBD consumer goods suppliers; and service providers, including equipment, manufacturing and processing.
The constituents go through an in-depth legal, due diligence process and only include equities listed on major stock exchanges such as the NYSE, Nasdaq and TSX. The index is independently calculated by Solactive.
Purpose Investments has over C$8bn in assets under management as of December 2019 across a range of ETFs and traditional funds, including the actively managed Purpose Marijuana Opportunities Fund (MJJ CN) listed on Canada’s NEO Exchange.
Commenting on the launch, Som Seif, CEO of Purpose Investments, said, “The medical cannabis industry was pioneered in Canada, and we’re thrilled with the opportunity to partner with HANetf to take what we have learned from our Purpose Marijuana Opportunities Fund (MJJ) to Europe. We believe that the cannabis sector is still in the infancy stages of a multi-year growth phase and that there is ample opportunity for innovation and new discoveries. We are very excited to embark on this journey with HANetf in a global investor market.”
Hector McNeil, co-Founder and co-CEO at HANetf, added, “Up until now, European investors have experienced restricted access to the cannabis market. With the launch of this truly innovative ETF, there is now a product for investors who want exposure to the cannabis industry through a pre-screened basket of cannabis securities and in a regulated UCITS ETF.”
The fund is physically replicated and domiciled in Ireland. It is scheduled to debut next week and has been passported for sale into the UK and Italy.
It will come with a total expense ratio (TER) of 80 bps.