The Canadian cannabis sector is one that have proven to be a difficult trade for investors in the past couple years. Growth post-legalization has not materialized as many hoped. Heightened concerns around valuations of cannabis producers has led to a selloff which has slowed of late.
In this article, I’m going to highlight why things may start to turn around for the sector, and specifically discuss one Exchange Traded Fund (ETF) best suited for investors seeking exposure.
The Horizons Medical Marijuana Life Sciences ETF (TSX:HMMJ) holds perhaps the broadest basket of companies servicing the industry in Canada and around the world. For this sector specifically, this ETF provides the greatest degree of diversification an investor could hope for in this still fragmented sector, at a reasonable cost.
This fund is geared toward aggressive investors seeking parabolic growth in a cannabis space that is in dire needs of some positive catalysts to take share prices higher.
ETFs like these tend to bottom when uncertainty bottoms and holding this ETF through periods of uncertainty can be costly, as we’ve seen recently. That said, for those bullish on an economic recovery led by continuous stimulus and the need for alternative medicines such as medical cannabis to increase over time, this ETF could provide excellent growth long-term.
The medical component of this sector is the piece I believe in for long-term investors, so staying clear of the noise around recreational cannabis is key for making long-term investment in this ETF.
Invest wisely, my friends.
