679 Million Reasons the Marijuana Stock Craze Should Scare You

When investors see an opportunity to make money, they pounce on it. That’s never been clearer than with marijuana stocks, with a rising tide of ordinary investors looking for ways to cash in on the cannabis craze.

Yet what many investors who are new to a popular trend don’t realize is that most investing fads eventually end — and when they do, they can collapse just as quickly as they formed. For investors in the ETFMG Alternative Harvest ETF (NYSEMKT:MJ)diversified exposure to cannabis stocks is a huge selling point. As quickly as assets have poured into the fund, however, they could easily reverse course if the reality of the marijuana industry doesn’t live up to lofty current expectations.

How Alternative Harvest has pulled in money

Alternative Harvest’s primary appeal is the fact that it holds more than three dozen marijuana stocks. Some of them trade primarily on Canadian stock exchanges, making them somewhat less accessible for U.S. investors than the handful of cannabis stocks that trade on the New York Stock Exchange or Nasdaq Stock Market.

The speed with which Alternative Harvest’s assets under management have taken off during the marijuana craze is impressive. After starting operations in late 2015, the ETF pulled in less than $3 million of investor capital in its first fiscal year of operations. The following year, interest in the ETF remained limited, and the fund had only $6.27 million in assets under management as of September 2017.

Once the ETF adopted its current name, it started to gain traction. As recently as last December, the fund had been known as Tierra XP Latin America Real Estate, focusing on a completely different investment objective.

From the fund’s perspective, the gambit has worked. Alternative Harvest now has almost $679 million in assets as of Oct. 9. Much of that money has come in recently, with assets under management nearly doubling from…

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