Except the Alternative Agroscience ETF isn't precisely a new fund.
Instead, ETFMG is retrofitting an existing ETF, the Tierra XP Latin America Real Estate ETF (LARE), with a new strategy. Effective Dec. 26, LARE's index will change from a Solactive benchmark that tracks mostly Mexico and Brazil REITs to a Prime Indexes benchmark tracking cannabis cultivators, producers and distributors, as well as cannabinoid drug makers, fertilizer producers and tobacco companies.
The Alternative Agroscience ETF would be the first marijuana ETF to come to market in the United States. As such, its first-mover advantage could be significant.
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"As an issuer, we've seen increasing demand from investors looking for solutions to gain access to this space," said Sam Masucci, chief executive officer and founder of ETF Managers Group, the fund's investment advisor.
But the index transition also means radically altering LARE's focus and risk/return profile, as well as eliminating the market's only pure-play Latin American real estate fund.
The move has left some investors fuming.
"I think it's a little scummy what they're doing," said Peter DeCaprio, portfolio manager and principal at Crow Point Partners in Hingham, Massachusetts. Crow Point is the largest investor in LARE, owning a 22 percent stake, according to most recent 13-F filings.
"But as long as they have support at the board level, if they want to change up the strategy, then they can," he added.