Horizons To Launch World’s First Psychedelic Stock Index ETF
On December 24, the psychedelics sector received an early Christmas present. Horizons ETFs filed a prospectus to introduce the world’s first psychedelic stock index ETF to the market. The soon-to-be NEO Exchange listed issue is a natural extension of a sector which has come of age—specifically in the calendar fourth quarter of this year.
About The Issue
The Horizons Psychedelic Stock Index ETF is an open-end mutual fund trust established under the laws of Ontario. The ETF seeks to replicate, to the extent possible, the performance of the North American Psychedelic Stock Index, net of expenses. The underlying index—which is to be established by Solactive AG— is designed to provide exposure to the a basket of North American publicly-listed life sciences companies having significant business activities in, or exposure to, the psychedelics industry.
Since 2007, Solactive AG has been developing multi-asset class index solutions for ETFs and other index-linked investment products. These involve involving everything from liquid assets such as the US Dollar and U.S. Treasury Bond to specialty products such as the Solactive Equileap Europe Gender Equality GTR Index. The psychedelic index will be the first of its kind, and will likely lead to additional specialized offshoots as the sector matures.
The Manager, on behalf of the ETF, has applied to list the Units on the Neo Exchange—although it’s important to note that the Exchange has not conditionally approved the Manager’s listing application at this time. The target date for the listing is January 15, 2021, although this has yet to be officially confirmed.
Investors may trade Units of the ETF in the same way as other securities listed on the Exchange, including the use of market and limit orders. Standard brokerage commissions will be incurred when buying or selling Units on the Exchange. Dealers may purchase a prescribed number of units (PNU) from the ETF at the net asset value per Unit of the ETF.
Units are available in Canadian dollars, the base currency of the ETF.
Diversification For Psychedelic Investors
Perhaps the biggest benefit of this soon-to-be ETF is the diversification it provides investors. This is especially true in emerging world of psychedelic medicine—a promising yet unproven class of next-generation therapeutics. Although the sector will yield generational winners among today’s field, many will fail as clinical trials or therapeutic business models fail to go the distance.
Of the many asset classes around, stock picking in the biotech sector is among the most perilous. Each has its own special risks, elongated timelines and high failure rates on clinical trial side. Thus, the Horizons Psychedelic Stock Index ETF is a great way for investors to gain exposure while decentralizing risk. More conservative investors will opt to sacrifice some upside for safety in numbers.
In addition to reducing market volatility, many investors have cut their commitment to time consuming and expensive stock research. By over and underweighting ETF industry sectors, investors can obtain suitable allocations that satisfy individual financial goals.
TDR will have additional coverage as additional information on the Horizons Psychedelic Stock Index ETF emerges.