One of the recent filings from ETF Managers Group describes plans for the firm to start an ETF that will target the medical marijuana and industrial hemp industries. The Emerging AgroSphere ETF is currently in place to become the first of its kind as there have been no other similar ETF filings.
The plan indicates that the fund’s underlying index will follow companies that engage in investigative studies on cannabidiol CBD and cannabis derivatives and synthetics for use in prescription medication and in companies that produce or sell forms of industrial hemp. The index can also involve companies that are linked in the supply chains of the two previously mentioned types of companies.
The document clearly states that the component companies’ involvement with marijuana must be entirely lawful, but it does also note that could change if marijuana usage becomes legal for nonmedical purposes.
The index provider relies on publicly available sources to determine which companies qualify for inclusion in the index. Companies can be selected from U.S. and foreign markets but must meet size and liquidity requirements and be listed in a market that meets investability requirements.
According to the prospectus, the index is rebalanced and reconstituted on a quarterly basis. The filing did not include an expense ratio or ticker, but it did indicate the fund will list on the NYSE Arca.
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