Swissquote joins the green rush

Swissquote has launched the Swissquote Cannabis Portfolio, a delta-one certificate traded on the Swiss stock exchange (SIX) which allows retail investors "to trade this market without actually having to become an expert on the subject".

The tracker's diversified portfolio is made up of cannabis industry leading firms - all listed companies, that offer investors the potential to generate returns via a broad diversification approach, transparency, low cost, and daily liquidity.

The proven market size has created the ideal opportunity for forward thinking investors, according to Peter Rosenstreich (pictured), head of market strategy at Swissquote. "The challenge is to figure out how the business will develop and what companies will are correctly positioned," said Rosenstreich. "We believe, as with gambling industries in the 1980 and 1990, states that legalized some form of recreational or medical usage will steadily spread. The question is how quickly substantial illegal cannabis revenue can be captured legally."

As one of the fastest-growing industries, with sales estimated to reach US$75bn by 2030, the cannabis industry is one that should not be forgotten as it is set to become a "very lucrative segment" in the years ahead, according to Rosenstreich.

"Taking effect in Canada as early as 2018, the legalization of recreational pot is now a reality - this time supported by real economic fundamentals," said Rosenstreich, noting that companies that derive majority of revenue from Cannabis are small and limited. "Therefore the market is still extremely illiquid and lacking transparency which will keep larger investors away. For some there are also ethical issues which must be considered. For now products will be limited to manger willing to do the extra due diligence."

As a theme, this kind of investment encompasses all the possibilities offered by the flourishing cannabis industry, mostly focusing on North American cannabis pure-player firms with high growth potential. Ranging from early-stage production and distribution to final consumption for personal and medical use (i.e. medicines, pain relief, cancer treatment, etc.), the Swissquote cannabis certificate provides full coverage of the marijuana industry, allowing for the highest expected returns, said Rosenstreich, noting that the long-awaited legalization of cannabis is taking place, and being an early mover in this evolving new product trend will rip benefits.

A popular investment theme across North America, cannabis has gained some momentum in Europe over the last couple of years. SRP has recorded over 300 structured products in Germany and Austria linked to companies involved in the cannabis industry, of which 262 products are still live.

Lang und Schwarz has been a pioneer with cannabis-linked products and has marketed over 180 tracker certificates with reference assets such as the LUS Wikifolio-Index Cannabis, Cannabis Wheaton Income, and Marapharm Ventures. However, since the beginning of 2018, Commerzbank has brought to market 140 turbo and discount certificates in Germany and Austria linked to cannabis companies such as Aurora Cannabis and Canopy.

Beyond Cannabis and cryptocurrencies, another asset with potential to drive sales and deliver returns is sustainable Investing, "by far the most important trend in asset management right now", according to Rosenstreich.

"Increasingly there is research that performance is not damaged and actually can improve value over the long-term by ethical or social responsible investing," said Rosenstreich. "In the near future every managed product will have a non-financial mandate attached."

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