MarketsMay 31, 2021
ETF Spotlight: The first US Psychedelics ETF begins trading
Bio Venture
Victor LeiETF: Defiance Next Gen Altered Experience ETF (NYSE:PSY)
Launched last week, is an ETF that holds 20 companies in the production, distribution, or services related to psychedelics, medical cannabis, and ketamine for health treatments.
- ETF launch date: May 28, 2021
- Top 3 Holdings: Charlottes Web Holdings Inc (TSE:CWEB), Aurora Cannabis (NASDAQ:ACB), Cronos Group (TSE:CRON)
Other fund facts:
- ~$750m average market cap among the 20 companies on the list.
- Nearly 75% of the companies are higher-risk smaller cap companies (<$300m market cap)
- Nearly 50% of the companies aren’t making any revenue — i.e. products are still being developed and could be years away from seeing any sales.
What to expect? Lots of volatility. Both the psychedelics and cannabis industry are risky but is even riskier — holding smaller and lesser-known cannabis stocks (focus on CBD products).
- FDA approval for psychedelic-based depression treatment in the US is years away.
- None of the 7 psychedelic stocks in the ETF have a commercialized product.
Here’s what you need to know about investing in Psychedelic stocks.
Also: In Jan, a similar product was launched in Canada, the Horizons Psychedelics Stock Index ETF (NEO:PSYK). Unlike, the Canadian ETF only invests in psychedelics stocks.
