Ballooning cannabis stocks have caused Canadian-based Horizons Marijuana Life Sciences Index ETF (HMMJ) to break $1 Billion CAD in assets for the first time, reports Investopedia.
Shares of the Exchange-Traded Fund, or ETF, have surged more than 43% in the past month and 124% since the start of trading in April 2017. Cannabis stocks across all North American markets have been booming this year, especially in Canada — where federal legalization is set to deploy in October.
“One of the key drivers of HMMJ’s rapid asset growth speaks to the investor demand and desire for a diversified portfolio of cannabis companies versus buying individual stocks. While there are clearly leaders in the marijuana equity sector, nobody knows for sure which companies will truly be successful over the long term or even be swallowed-up.” — Steve Hawkins, CEO of Horizons ETFs, via press release
Some market analysts claim that cannabis stocks are currently overvalued. However, despite media focus on the shares’ potential overvaluation, cannabis stocks have continued to grow into September. Even in August, the fund saw a total inflow of funds of more than $12 million CAD.
Beer manufacturers and holding companies have also invested heavily in the space, which is partly responsible for the current valuation of the market. In August, Corona-manufacturer Constellation Brands and Canadian cannabis producer Canopy Growth partnered on a $4 billion deal to expand their collective reach and develop cannabis-based beverages. Canopy Growth stock is the largest single holding by the HMMJ fund. Other beer companies, including Molson-Coors, have also invested in the market this year.