AdvisorShares Pure US Cannabis ETF (MSOS)

Overview of AdvisorShares Pure US Cannabis ETF (MSOS)

Profile:

AdvisorShares Pure US Cannabis ETF (MSOS) is an actively managed ETF that invests in US-listed cannabis companies. Its primary focus is on providing exposure to the emerging cannabis industry, specifically targeting companies involved in cultivation, production, marketing, and distribution of cannabis and related products. The ETF uses a diversified approach, with investments spread across various market capitalization segments and diverse sub-sectors within the cannabis industry.

Objective:

The primary investment goal of MSOS is to achieve long-term capital appreciation by investing in a portfolio of US-listed cannabis companies. The ETF seeks to outperform the broad market by actively selecting and weighting investments based on the management team's research and analysis.

Issuer:

MSOS is issued by AdvisorShares, a US-based investment management firm specializing in actively managed exchange-traded funds (ETFs). AdvisorShares has been in operation since 2009 and manages over $3 billion in assets across various thematic and sector-specific ETFs.

Reputation and Reliability:

AdvisorShares has a solid reputation in the ETF industry, known for its innovative and actively managed ETF products. The firm has received awards and recognition for its performance and transparency. However, as with any investment, it's important to conduct thorough research and due diligence before investing.

Management:

The MSOS portfolio is actively managed by AdvisorShares' experienced investment team, led by Portfolio Manager Dan Ahrens. Ahrens possesses over 20 years of experience in the financial industry and has a deep understanding of the cannabis sector. The team conducts extensive research and analysis to identify and select companies with strong growth potential.

Market Share:

MSOS is a relatively new ETF, launched in 2021. As of November 2023, it holds a significant market share within the cannabis ETF space, with approximately 25% of the total assets under management in the category.

Total Net Assets:

MSOS's total net assets under management are currently over $500 million.

Moat:

MSOS has several competitive advantages:

• Active Management: The ETF's active management approach allows for greater flexibility in selecting and weighting investments, potentially leading to superior performance compared to passively managed cannabis ETFs.
• Experienced Management Team: The portfolio is managed by a team with deep expertise in the cannabis industry, enabling them to identify promising investment opportunities.
• Diversified Portfolio: The ETF invests in a diversified range of US-listed cannabis companies, reducing concentration risk and aiming for broader market exposure within the sector.

Financial Performance:

MSOS has delivered strong historical performance since its inception in 2021. The ETF has outperformed its benchmark index, the Solactive US Cannabis Index, and generated significant returns for investors. However, it's important to remember that past performance is not indicative of future results.

Benchmark Comparison:

MSOS has consistently outperformed its benchmark, the Solactive US Cannabis Index, showcasing the effectiveness of its active management strategy.

Growth Trajectory:

The global cannabis market is projected to experience significant growth in the coming years, driven by increasing legalization and changing societal attitudes. This positive outlook suggests potential for continued growth for MSOS.

Liquidity:

MSOS has a high average trading volume, indicating strong liquidity and ease of buying and selling shares. The ETF also boasts a tight bid-ask spread, minimizing transaction costs for investors.

Market Dynamics:

The cannabis industry is influenced by various factors, including:

• Legalization: Changes in federal and state cannabis legalization policies significantly impact the industry's growth and investment landscape.
• Public Perception: Evolving public perception of cannabis can influence consumer demand and industry acceptance.
• Competition: The increasing number of cannabis companies entering the market creates a competitive environment.

Competitors:

Key competitors of MSOS in the cannabis ETF space include:

• ETFMG Alternative Harvest ETF (MJ)
• The Cannabis ETF (THCX)
• Amplify Seymour Cannabis ETF (CNBS)

Expense Ratio:

MSOS has an expense ratio of 0.75%, which is considered average for actively managed thematic ETFs.

Investment Approach and Strategy:

MSOS employs an active management strategy, aiming to select and weight investments based on the management team's research and analysis. The ETF primarily invests in US-listed cannabis companies across various market capitalizations. The portfolio composition may include:

• Cannabis producers and cultivators
• Cannabis product manufacturers
• Cannabis retailers and distributors
• Cannabis ancillary businesses

Key Points:

• Actively managed ETF focused on US-listed cannabis companies.
• Strong historical performance and outperformance of benchmark.
• Diversified portfolio across various market capitalization segments and sub-sectors.
• Experienced management team with deep cannabis industry expertise.
• High liquidity and tight bid-ask spread.

Risks:

• Volatility: The cannabis industry is relatively new and can experience significant price fluctuations.
• Regulation: Changes in cannabis regulations could negatively impact the industry and the ETF's performance.
• Competition: The increasing competition within the cannabis industry could put pressure on margins and growth prospects.
• Market Risk: The ETF's performance is tied to the performance of the underlying cannabis companies, which can be affected by various factors beyond the ETF's control.

Who Should Consider Investing:

MSOS is suitable for investors:

• Seeking exposure to the growing cannabis sector.
• Comfortable with higher volatility associated with thematic ETFs.
• Holding a long-term investment horizon.
• Understanding the risks involved in the cannabis industry.

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, MSOS receives a fundamental rating of 8 out of 10. The ETF demonstrates strong financial performance, a competitive market position within the cannabis ETF space, and a promising outlook for growth.

Resources and Disclaimers:

This analysis utilizes data from the following sources:

• AdvisorShares website: https://www.advisorshares.com/etfs/msos/
• ETF Database: https://etfdb.com/etf/MSOS/
• Bloomberg Terminal

Disclaimer:

This information is for educational purposes only and should not be considered financial advice. Investing in MSOS or any other ETF involves risk, and you should carefully consider your investment objectives and risk tolerance before making any investment decisions. It is essential to conduct thorough research and consult with a qualified financial advisor before investing.