US-based Actively Managed Marijuana Fund Launches

Investors gain another entry to marijuana investing thanks to the launch of a new actively managed fund.

Foothill Capital Management announced the launch of its a new open-end mutual fund, the “Cannabis Growth Fund” (CANNX), on Tuesday (February 26).

Eric Banhazl, chairman of Foothill Capital Management, said the firm sees cannabis as still in its infancy stage, but that its potential growth makes it worthwhile to open this fund.

The fund will be managed by Korey Bauer, a managing director with the firm. Since 2015 Bauer has been co-managing the All Terrain Opportunity Fund (TERIX).

“We believe active management is critical when investing in an industry that has frequent and evolving developments in regulation, applications and acquisition activity.”

The fund from the Arizona-based firm will charge a 0.85 percent fee for management services.

According to the prospectus for the new fund, the core investment strategies will hone in eight specific business types:

• Agriculture technology
• Ancillary products and services
• Biotechnology
• Cannabis products and extracts
• Consulting services
• Consumption devices
• Cultivation and retail
• Industrial hemp

Investors can expect this fund to pursue operations all across the globe where cannabis is legal. The fund will open the door to US companies by allowing state laws to determine whether or not a business is legal.

“It is anticipated that a large number of holdings within the Fund’s portfolio will be securities of Canadian companies,” the prospectus for the Cannabis Growth Fund indicated.

Active management shows benefits for other funds

Canadian financial institution Purpose Investments announced its marijuana fund, the Purpose Marijuana Opportunities Fund (NEO:MJJ), had seen a return of 53.43 percent over a one-year-period thanks to its portfolio manager.

“Passive investing in a new industry, such as marijuana, often means chasing or missing opportunities because the indexes are rebalancing much more slowly than the market itself is moving,” Greg Taylor, chief investment officer of Purpose Investments and portfolio manager of the fund said.

Fellow actively managed Canadian fund, the Evolve Marijuana ETF (TSX:SEED), has increased in value 41.77 percent over a year-to-date period.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.