The Jan. 19 decision is part of the company’s regular review process and is expected to impact less than 1% of its total assets under management.
The selection of funds marked for closure includes those focused on various sectors like cannabis, carbon credits, Chinese biotech, green building, and the metaverse. Specific funds such as the Global X Cannabis ETF (NASDAQ: POTX) and the Global X China Biotech Innovation ETF are among those listed for liquidation.
The Global X Cannabis ETF (POTX) invested in companies across the cannabis industry and was established in September of 2019. The instrument’s mission was stated as, “This includes companies involved in the legal production, growth and distribution of cannabis and industrial hemp, as well as those involved in providing financial services to the cannabis industry, pharmaceutical applications of cannabis, cannabidiol (i.e., CBD), or other related uses including but not limited to extracts, derivatives or synthetic versions.” The ETF had 16 cannabis holdings and $27.99 million in assets under management.
In May 2023, Global X Research Analyst Lis Agosto stated, “The cannabis industry has made huge strides in recent years, and we see a potentially long runway for growth ahead. However, given the large illicit market and complicated regulatory landscape, growth is unlikely to come in a linear fashion. Proposed legislation, such as the SAFE Act in the US and a potential framework for legalization in Germany, could add support to the industry but, in the meantime, companies are likely to remain focused on driving operational efficiencies and accelerating their paths to profitability.”
The ETF’s performance was lackluster. Its net asset value had dropped by 44.36% for one year and 51.98% for three years. The ETF’s top holdings as of January 23, 2024 were:
TILRAY BRANDS INC
ORGANIGRAM HOLDINGS INC
CRONOS GROUP INC
FLORA GROWTH CORP
AFC GAMMA INC
AURORA CANNABIS INC
CANOPY GROWTH CORP
Investors in these funds are advised to divest their shares by Feb. 16 before trading ceases. The process of liquidation is scheduled for completion on February 23, 2024. Shareholders retaining their shares until the liquidation date will receive cash payments based on the net asset value of their shares at that time.
Global X Management Company LLC, which advises Global X Funds, along with the Board of Trustees, has indicated that the decision aligns with the best interests of the funds and their shareholders. The company has also announced that it will absorb all costs associated with the liquidation, apart from brokerage fees and other related transaction expenses.
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