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Cannabis Sector Lacked Luster in March

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Apr. 1 2019, Published 8:08 a.m. ET

Weakness in March

The cannabis sector lacked luster in March. Major cannabis stocks such as Canopy Growth (WEED), Aphria (APHA), and Cronos Group (CRON) failed to end the month in positive territory. However, overall these stocks and others in the sector have still delivered strong YTD returns.

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Sector ETFs

If you entered the cannabis sector towards the end of December last year, you would have experienced an impressive return YTD. However, the same cannot be said if you entered a position in March. As the above chart shows, the Horizons Marijuana Life Sciences ETF (HMMJ) lost about 2% in March.

However, the ETF returned about 50% YTD. If you invested in the S&P 500 Index over the same period, you would have gotten a return of only 13%. Similarly, if you invested in the TSE 300 Composite Index, you would have gotten a return of 12% over the same period.

The ETFMG Alternative Harvest ETF (MJ) also delivered 46% returns YTD. Both these ETFs have a significant overlap in holdings. As of the date of this writing, MJ’s top holding was Aurora Cannabis (ACB), which accounted for 9.5% of its holdings, while HMMJ’s top holding was Canopy Growth (WEED), representing about 11% of its overall holdings. Aurora Cannabis was the second top holding at 10.7%. Canopy Growth was the fourth top holding for MJ at 6%.

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