There has been renewed hype in the cannabis industry as investors have been bullish on pot stocks of late, on hopes that marijuana reform could be coming. There is even a new exchange-traded fund (ETF) that will give investors a way to tap into that potential. The new Subversive Cannabis ETF (CBOE:LGLZ) even uses a ticker symbol that sounds like ‘legalize.’
According to the fund’s description, it “invests in companies that we believe will thrive as the legal marijuana industry expands.” The fund just launched on Sept. 19 and is actively managed with an expense ratio of 0.75%. One drawback for investors is that the fund is not very diverse at all and instead it will give you exposure to the main multi-state operators in the country. The ETF’s top-three holdings account for more than 62% of its total net assets. Those stocks include Green Thumb Industries (OTC:GTBIF), Verano Holdings (OTC:VRNOF), and Curaleaf Holdings (OTC:CURLF).
Due to the volatility in the cannabis industry, this may not be the safest option for investors to hold. And legalization is by no means a guarantee and may still be years away, if marijuana ends up being legalized at all. Given the lack of diversification in the fund, investors may simply be better off picking the multi-state operator(s) they like best and invest in them directly.
The LGLZ ticker can be a good gauge of how MSOs are doing but this fund, given its high expenses, may not offer investors enough of a reason to add it to their portfolios.
