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Commodities - APRIL 18, 2019

Another cannabis ETF launches

by Andrea Zander

AdvisorShares Pure Cannabis ETF has plans to launch a new exchange-traded fund focused on marijuana stocks with plans to undercut competitors.

With a ticker of YOLO (“You Only Live Once”), the firm will charge 74 basis points, or $7.40, for every $1,000 invested, according to regulatory documents. YOLO becomes the first U.S.-listed active ETF to deliver dedicated, fully invested cannabis exposure.

“Launching 1 basis point cheaper than MJ is a bit absurd, but symbolic of the era we are in right now where expense ratio is one of the first things an adviser looks at,” said Eric Balchunas, an ETF analyst at Bloomberg Intelligence. “This ETF has at least a fighting chance to find an audience.”

YOLO seeks long-term capital appreciation by investing in both domestic and foreign cannabis equity securities. This active ETF allocates across a universe of primarily U.S. and Canadian cannabis companies engaging in legal business, which span different industries, including those specializing in consumer products. YOLO’s portfolio management team carries deep experience in the capital markets and a well-established expertise of investing in highly regulated areas of the markets including cannabis.

YOLO will invest 80 percent or more of its assets into companies that derive 50 percent or more of their revenue from the marijuana and hemp industry. These securities could originate from a variety of industries and sectors, including agriculture, biotech, pharmaceuticals, real estate, retail and finance.

At least 25 percent of the fund will be invested in pharmaceutical, biotech and life sciences companies using cannabis and cannabinoid-related substances.

“We feel cannabis stands poised to become a market disruptor and long-term emerging growth opportunity, especially as societal, business and regulatory landscapes evolve,” said Dan Ahrens, managing director of AdvisorShares and portfolio manager of YOLO. “We believe YOLO may provide a compelling case to investors seeking emerging growth and dedicated cannabis exposure for their portfolios.”

The only one marijuana ETF that is designed primarily for investors in the United States to use was ETFMG Alternative Harvest ETF, which launched in late 2017.

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