Is Now The Time To Buy This ETF?

The variety of exchange traded funds (ETFs) available to investors today is staggering, covering nearly every index, sector and secular growth trend out there. The cannabis sector is no exception. I this article, I will discuss the main ETF tracking this sector the Horizons Marijuana Life Sciences ETF (TSX:HMMJ).

This ETF’s performance over the last couple of years highlights the degree to which cannabis investing has fallen out of favour with retail investors. Growth has not materialized as many expected prior to legalization in Canada. Global growth prospects for this sector remain muted outside of medical marijuana usage, which is typically supplied at the domestic level in other countries.

Canadian cannabis firms have had little in the way of catalysts materialize of late. The coronavirus pandemic is yet another untimely hit to the sector.

With the valuations of so many cannabis producers being hit so hard of late, the temptation of many growth investors to pick up shares of said companies at these levels may be higher than normal. That said, continued losses, writedowns and layoffs have continued to hamper optimism around growth and the future prospects for producers and this ETF in general.

For the time being, until we see real profitability in this sector, I’d encourage investors to focus on other ETFs in less volatile sectors, given the level of economic uncertainty the world faces at this present time.

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Invest wisely, my friends.