- Things continue
to look up for our medical cannabis ETF and cannabis as a whole: the upcoming US elections are expected to
further increase medical legal jurisdictions in the US for cannabis.
- Germany hit a
symbolic milestone for medical cannabis activity, with over 100,000 patients
applying for reimbursement from their insurers since the start of the medical
cannabis program in early 2017[1]
Performance Review
September brought
about a pause and a breather in equity markets. The summer brought about an
abundance amidst a fast-economic recovery aided by highly accommodative
monetary and fiscal policies globally. This froth was wiped clean in September
as the threat of a second wave of Covid-19 becomes imminent and an ugly
election season comes to the foreground. Cannabis, true to its high beta,
performed in line with these broader expectations, with pharmaceuticals
performing slightly better due to the defensive correlation with the broader
healthcare sector. CBD Wellness lost steam as a logjam in congress failed to
floor a redesigned hemp bill which would greatly increase the addressable
market. However, things do continue to look up for cannabis as a whole as the coming
US elections are expected to further increase medical legal jurisdictions in
the US for cannabis.
Medical Cannabis Index Monthly Performance
|
September |
The Medical Cannabis and Wellness Equity Index (NTR) |
-10.85% |
Current performance is no guarantee of future performance. Source: Bloomberg/ HANetf
Sub-sector |
September Performance |
Ancillary Services |
-11.3% |
Pharmaceutical Cannabinoids |
1.1% |
Medical Cannabis |
3.9% |
CBD Wellness |
-23.3% |
CBDX |
-10.8% |
Past performance is no guarantee of future performance. Source: Bloomberg. Data as of 30/09/2020
Medical Cannabis and Wellness Equity Index (NTR) Performance and CBDX Medical Cannabis ETF
Total Return NAV to Date (up to 30/09/2020)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
Since Inception
|
The Medical Cannabis and Wellness UCITS ETF (Acc)
|
-10.77%
|
1.55 %
|
35.87 %
|
2.05 %
|
-
|
2.05%
|
Medical Cannabis and Wellness Equity Index (NTR)
|
-10.85%
|
1.61 %
|
36.03%
|
1.61%
|
-16.98%
|
1.61%
|
Performance before inception is
based on back tested data. Back testing is the process of evaluating an
investment strategy by applying it to historical data to simulate what the
performance of such strategy would have been. Back tested data does not represent
actual performance and should not be interpreted as an indication of actual or
future performance. Past performance for the index is in USD. Past performance is not an
indicator for future results and should not be the sole factor of consideration
when selecting a product. Investors should read the prospectus of the Issuer
(“Prospectus”) before investing and should refer to the section of the
Prospectus entitled ‘Risk Factors’ for further details of risks associated with
an investment in this product.
Source: Bloomberg/ HANetf. Data as of 30/09/2020
Industry News
Germany hit a
symbolic milestone for medical cannabis activity, with over 100,000 patients
applying for reimbursement from their insurers since the start of the medical
cannabis program in early 2017. Although this number does not include all
medical cannabis prescriptions, it does provide insight into growth of the
medical cannabis program in Germany which has been fairly stable since
initiation. In the second quarter of 2020, total reimbursements reached 36.7M
Euros, setting Germany a run-rate of roughly 150M Euros in sales, and a 24%
increase in year over year sales[2].
In a sign of
confidence, the UK’s financial regulator (Financial Conduct Authority) has
cleared the listing of medical cannabis companies on the senior London Stock
Exchange (LSE). For now, companies operating in the medical cannabis space
globally will be allowed to list given they have the appropriate government
licenses and do not fall foul of the UK’s Proceeds of Crime Act 2002 (POCA).
The demand for medical cannabis investment continues to grow in the UK as
evidenced by this regulation. Ahead in the pack are family offices and high net
worth investors, who recently came together to raise US$100M[3] in a
private fund to invest in medical cannabis, pharmaceutical cannabinoids, and
CBD wellness, a theme which is in line with the investment thesis of our medical cannabis ETF.
Outlook
As we approach
November, excitement continues to build around the US elections and the
multiple referendums on cannabis which will take place concurrently. Five
states are to vote on cannabis legalisation in the coming elections for either
medical or adult-use, with the total population impacted close to 20 million.
This defines the base case of further legalisation in the US. Additionally, the
general election is seeming to be more tilted towards a Democrat sweep which
would further bolster the cannabis industry in the US.
Outside of the
US, patient counts in Australia and Israel are on the rise which rounds out the
medical cannabis story to be a wider one beyond the immediate monetisation of
the US alone. Australia experienced another six thousand patients in September[4],
and Israel another ten thousand in August[5]. Similar stories continue
to prevail in different jurisdictions across the world but any federal moves in
the US will be largely influential to many international markets as well.
Constituent News
Corbus
Pharmaceutical (CRBP) is a clinical
stage pharmaceutical company focused on the development and commercialisation
of novel therapeutics targeting the endocannabinoid system to treat
inflammatory and fibrotic diseases. Corbus recently announced negative phase
III data of their lead drug in systemic sclerosis. The drug failed to show any
significant improvement over a placebo group, but the study largely illustrated
the inherent complexities of testing in a group with extensive use of
background immunosuppressives. CRBP still has several shots on goal for the
drug in other indications but largely comes to show the challenges of smaller
pharmaceutical companies and the possibility of binary outcomes. The stock was
down 80% for the month of September, but the analyst community remains hopeful
of the company’s future given that better controlled studies shall be designed
going forward. The company is now a 1.6% weight in CBDX[5].
The ancillary
services industry continues to show outsized growth as the adult-use cannabis
industry takes off in the United States. Scott’s
Miracle Grow (SMG) updated their
fiscal outlook for the 2020 fiscal year, with earnings expected to further
exceed prior guidance. Company-wide sales growth of more than 30% is being
recorded year over year[6] and is expected to continue on the back of
further development of the US cannabis industry which awaits tailwinds from
coming elections.
Top 10 Constituents
|
Weight
|
Arena Pharmaceuticals Inc
|
19.46%
|
Innovative Industrial Properti
|
19.14%
|
Scotts Miracle-Gro Co/The
|
15.40%
|
GW Pharmaceuticals PLC
|
12.18%
|
GrowGeneration Corp
|
8.09%
|
Amyris Inc
|
6.37%
|
Cara Therapeutics Inc
|
6.35%
|
Charlottes Web Holdings Inc
|
2.28%
|
Medicenna Therapeutics Corp
|
2.12%
|
NewAge Inc
|
1.71%
|
Region Breakdown
|
Weight
|
United States
|
85.29%
|
Great Britain
|
12.18%
|
Canada
|
2.53%
|
Medical Cannabis ETF Details
The Medical Cannabis and Wellness UCITS ETF, is a UCITS compliant Medical Cannabis ETF domiciled
in Ireland.
Our medical cannabis ETF tracks a rules-based Medical Cannabis and Wellness Equity Index from
Solactive, consisting of publicly listed companies conducting legal business
activities across nine thematic sub-sectors in the medical cannabis, hemp and
CBD industries.
The
fund seeks to provide targeted exposure to the rapidly expanding legal medical
cannabis industry that is set for further growth as more countries legalise
cannabis for medical use.
Please
remember that the value of your investment may go down as well as up and past
performance is no indication of future performance.
Exchange |
BB Code |
RIC |
ISIN |
Currency |
Income |
London Stock Exchange |
CBDX LN |
CBDX.L |
IE00BG5J1M21
|
USD |
Acc |
London Stock Exchange |
CBDP LN |
CBDP.L |
IE00BG5J1M21 |
GBP |
Acc |
Xetra |
CBSX GY |
CBSX.DE |
DE000A2PPQ08 |
EUR |
Acc |
SIX |
CBDX SW |
CBDX.S |
IE00BG5J1M21 |
CHF |
Acc |
Click here to download Medical Cannabis Monthly Report.