One cannot buy or consume drugs in India. But what if we tell you some seasoned investors in the country are getting a high out of investing in drugs? Wondering if it's legal? Well, in a way, yes.
Global investment platforms such as Globalise, Vested Finance and Interactive Brokers have seen Indian investors taking special interest in 'cannabis stocks'. Not just cannabis, they are keen to lap up emerging investment themes that are lacking in India.
"There is a lot of interest from customers in futuristic themes such as clean energy and cloud computing, as well as in some niche special interests like cannabis and crypto, all of which are available to invest in through the US markets. Investment in the futuristic themes has grown over 100 per cent during the last quarter and now accounts for nearly 3 per cent of asset under management (AUM). Cannabis and crypto are drawing interest from specific investors and being niche interests, here the overall AUM is less than 1 per cent," says Viraj Nanda, CEO, Globalise.
Nanda says they have noticed a surge in enquiries about cannabis from Indian investors. The three most popular ETFs on its platform include YOLO: AdvisorShares Pure Cannabis ETF, CNBS: Amplify Seymour Cannabis ETF and TOKE: Cambria Cannabis ETF.
"Cannabis is legal in the US. It is considered a recreational drug and is being legalised in other parts of the world too. So, there is some interest in that from Indian investors. People want to get in early and ride that wave as the industry becomes regulated and organised," he says.
Viram Shah, Co-founder & CEO, Vested Finance agrees that cannabis stocks have caught the fancy of Indian investors. Three cannabis stocks the most in demand on Vested include Aurora Cannabis (ACB), Tilray (TLRY) and Canopy (CGC).
"Aurora Cannabis is held by 4 per cent of Vested investors, whereas Tilray and Canopy are held by 1.2 per cent and 0.5 per cent, respectively. Total dollar value of investment in Aurora Cannabis currently is $300,000. The dollar value had climbed up to half a million when the share price crossed $19 in February 2021. Majority of the shareholders of cannabis stocks are in the 25-34 age group," says Shah.
Even though ACB's price has dropped significantly over the last few months, adds Shah, investors continue to hold the stock.
Among others, clean energy, crypto and carbon emissions are few more popular themes drawing interest from Indian investors. QCLN: First Trust NASDAQ Clean Edge Green Energy ETF and PBW: Invesco WilderHill Clean Energy ETF are two popular ETFs in clean energy theme.
Wind: First Trust Global Wind Energy ETF (FAN), Solar: Invesco Solar ETF (TAN), Water: First Trust Water ETF (FIW) are some of the sub-themes within clean energy ETFs.
BLOK: Amplify Transformational Data Sharing ETF and BLCN: Siren Nasdaq NexGen Economy ETF are two crypto ETFs on Globalise's platform preferred by investors.
In carbon emissions, investors prefer CRBN: iShares MSCI ACWI Low Carbon Target ETF, LOWC: SPDR MSCI ACWI Low Carbon Target ETF and SMOG: VanEck Vectors Low Carbon Energy ETF.
"Indian investors are as curious as anybody about emerging themes which are gripping the world imagination. We don't monitor region specific data closely, but we do receive tons of enquiries on theme-based investments. I would say that sophisticated investors are definitely looking at themes such as cannabis, technology and EV but retail investors continue to prefer known names such as Tesla, Google and Amazon," says Chief strategist Mr. Steve Sosnick of Interactive Brokers.
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