- The world’s first psychedelic stock ETF is set to expand its portfolio in the coming weeks.
- Since launching in January, the PSYK ETF has raised more than $61.5 million (CAD).
- Horizons ETFs Management CEO Steve Hawkins said Canada would continue to be the place to invest in psychedelics due to the country’s forward-looking capital markets.
It is expected that a new slate of companies will be added to Horizons ETFs Management’s world-first psychedelic stock exchange-traded fund (ETF) in the coming weeks. Launched on Canada’s NEO exchange on January 27 under the ticker symbol PSYK, as of February 17 the ETF had already raised in excess of $61.5 million (CAD).
During Horizons’ Investing in Psychedelics webinar, held on February 18, Horizons CEO Steve Hawkins said it was likely companies would be added to the PSYK ETF before its scheduled quarterly rebalance in March. “We’ve got 100 different names on our watchlist right now that are very active in this space,” Hawkins said.
“When we launched we had 17 names in the portfolio. By the end of Q2 there could be 25 different names and by the end of the year 40 to 50. The North American Psychedelic Index and the ETF are built to adapt to the maturity of this sector.”
‘Pure Play’ Companies Dominate PSYK ETF Portfolio
Only 10 percent of the ETF is currently made up of large pharmaceutical companies such as Johnson & Johnson and AbbVie Inc. Hawkins confirmed that the pharmaceutical giants had been included in the ETF because both companies were operating in the psychedelics space. “Both of these companies are very committed to this space,” he said.
“Right now 90 percent of the ETF is made up of ‘pure play’ companies that are working with psychedelics,” Hawkins added, specifically mentioning Cybin, MindMed, and Compass Pathways. Hawkins said Cybin was “near and dear” to Horizons because both companies were based in Toronto, Canada. “We are very supportive of a company like Cybin that is going many different routes in this space. They are very active in drug therapies and developing delivery mechanisms,” he said.
While Horizons had been actively watching the psychedelics space for some time, the company had to wait until the market was large enough to create the PSYK ETF. “It wasn’t until the end of 2020 that we thought there was sufficient depth to psychedelics stocks to create this ETF,” Hawkins explained. “Last year, with Cybin and MindMed both doing an RTO and IPO on the NEO stock exchange which is where PSYK is listed, it really provided us the opportunity to create a more rounded, well-diversified portfolio.”
Canadian Capital Markets Attracting Psychedelic Companies
As with cannabis, Canada is the place to invest in psychedelics, according to Hawkins. “Our capital markets are more forward-looking with respect to investing in young, new, exciting sectors,” he said.
“Companies are coming to Canada, for example, MindMed. It is listed in Canada and not in the United States even though it’s an American company. If you look at the portfolio and where companies are based and listed, this is a really Canadian sector.”
While the ETF has been approved to be listed in USD, it is currently only available on the NEO exchange in Canada. Hawkins’ advice to international investors attending the webinar was to try and find a stockbroker with access to the Canadian market, but he warned that there were very few brokers outside Canada who could purchase the ETF.
Update 24/2/2021: read about the fast-tracking of Mindset Pharma and Novamind to be included in the PSYK ETF here.
Emily Jarvie is a writer and content creator whose work has appeared in North American, Australian, and European publications. Before moving to Canada, she was a political journalist for Australian Community Media in her home state of Tasmania.