Cannabis-focused mutual fund, ETF to close

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The Evolve Funds Group, a Canadian fund manager with more than 630 million Canadian dollars ($478 million) under management, on Tuesday said it will shutter a small, poorly performing cannabis mutual fund and an even smaller exchange-traded fund (ETF) that also invests solely in marijuana companies.

Evolve attributed the closing to the “volatile” nature of the marijuana space.

On or about March 30, the Toronto company will close the Evolve Marijuana Fund, which trades as SEED on the Toronto Stock Exchange, as well as the Evolve U.S. Marijuana ETF, which trades as USMJ on the NEO Exchange.

ETFs are similar to index mutual funds, but, unlike a mutual fund, their prices fluctuate throughout the day and they can be traded like stocks.

SEED, launched on Feb. 12, 2018, has only $4.25 million under management.

USMJ, launched in April 2019, has a mere $1.7 million in assets under management.

SEED lost 34% last year, compared with a 31.51% drop in the North American Marijuana Index, which tracks major cannabis stocks in the U.S. and Canada. Returns are not available for USMJ because it is less than a year old.

By comparison, the S&P 500 rose 30.4% in 2019.

Elliott Johnson, chief investment officer at Evolve, said the company’s outlook on the cannabis market has “changed significantly” over the past 12 months.

“Over-regulation in the Canadian market has stifled cannabis sales and dampened the entrepreneurial spirit that originally attracted so many investors,” Johnson wrote in an email to Marijuana Business Daily.