ETFs (Exchange Traded Funds) give investors the opportunity to invest in a basket of securities, providing opportunities for stock diversification but with the ease of buying and selling stocks.
ETFs usually track an index, sector, or commodity, minimizing potential risk and giving investors exposure to more assets with a single investment. They also give a sense of legitimacy to the sector, showing that the space is worthy of institutional attention and that the market believes the industry is a valid investment proposition.
Which is why, despite a tough half-year in the market, the launching of a new ETF on the prestigious NASDAQ exchange is positive news for the industry. Elemental Advisors is launching the PSYK ETF (NYSE: PSYK), a thematic ETF that will track the performance of the Enhanced Consciousness Index.
Not to be confused with the Horizons PSYK ETF listed on the NEO in Canada (NEO: PSYK), this ETF will “be principally comprised of companies that have, or are expected to have, a significant part of their business involved in the research, development, production and/or use of psychedelic-based pharmaceuticals and therapeutics.”
While it’s great to have another major fund promoting the space, this does not look like the purest of pure-play psychedelic ETFs. The holdings seem to have several biotech firms not currently focused on psychedelics, and while this might add some protection in today’s depressed market, it may be something to consider for those looking to invest in shroom stocks and support the space.
It will be interesting to see how the ETF performs against other psychedelic funds. See below for the full press release.
Interested in more ETF news? Check out A Closer Look at the Actively-Managed PSIL Psychedelic ETF
Elemental Advisors Launches PSYK ETF Focused on the Medical Psychedelics Industry
February 01, 2022 06:05 AM Eastern Standard Time
SARASOTA, Fla.–(BUSINESS WIRE)–Elemental Advisors Inc. (“Elemental Advisors”) is pleased to announce the launch of PSYK ETF (NYSE: PSYK), a thematic ETF that tracks the performance of the Enhanced Consciousness Index (the “Index”), which is principally comprised of companies involved in the research, development, production and/or use of psychedelics to address medical conditions in legal pharmacological applications under the applicable jurisdiction’s laws.
As one of the first U.S. listed psychedelic ETFs, PSYK provides investors with exposure to companies involved in the rapidly developing and potentially disruptive medicinal psychedelic drug market, which is forecast to reach $10.75 billion by 2027 according to a report from Research and Markets.
“Mental health issues, such as depression, PTSD and substance abuse, continue to be big societal problems, which have likely grown due to COVID-19 and the subsequent lockdown environment. While current treatments for these conditions can often be inadequate, there’s been some recent groundbreaking research that has shown psychedelic compounds to be a safe and effective treatment for people suffering from these illnesses,” said Tim Collins, a founder and President of Elemental Advisors. “For these reasons, coupled with the growing societal and regulatory acceptance of psychedelics, we believe that the psychedelic drug market is on the cusp of realizing its true potential and that the PSYK ETF can be an attractive option for savvy investors who are looking to gain access to this burgeoning segment on the ground floor.”
The Index will be principally comprised of companies that have, or are expected to have, a significant part of their business involved in the research, development, production and/or use of psychedelic-based pharmaceuticals and therapeutics. If fewer than 25 psychedelic companies qualify for inclusion in the Index, the Index will also include neurology biopharmaceutical companies, subject to a maximum of 35 total companies in the Index. Only stocks of developed market countries or ADRs of emerging markets countries that meet minimum capitalization and liquidity criteria are considered for inclusion in the Index.
About Elemental Advisors Inc.
Elemental Advisors was founded by individuals with decades of experience in capital markets to provide investors exposure to a diversified portfolio of companies engaged in cutting-edge medical research in drugs and therapies that may be disruptive to the medical industry. The first offering is an ETF focused on the emerging use of psychedelic compounds in the treatment of mental health issues (NYSE Ticker: PSYK). To learn more, please visit www.psyk-etf.com.
Disclosures
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, visit www.psyk-etf.com/investor-materials. Read the prospectus carefully before investing.
An investment in the Fund involves risk, including possible loss of principal. There is no assurance that the Fund will achieve its investment objectives.
A new or smaller fund is subject to the risk that its performance may not represent how the fund is expected to or may perform in the long term. In addition, new funds have limited operating histories for investors to evaluate and new and smaller funds may not attract sufficient assets to achieve investment and trading efficiencies.
Associated Risks of Psychedelic Treatment Companies. In Canada, certain psychedelic drugs, including psilocybin, are classified as Schedule III drugs under the Controlled Drugs and Substances Act (“CDSA”) and as such, medical and recreational use is illegal under Canadian federal law. In the United States, most psychedelic drugs, including psilocybin, are classified as Schedule I drugs under the Controlled Substances Act (“CSA”) (21 U.S.C. § 811) and as such, medical and recreational use is illegal. There is no guarantee that psychedelic drugs or psychedelic inspired drugs will ever be approved for a therapeutic or medicinal use in either jurisdiction. In the United States, the U.S. Drug Enforcement Administration (“DEA”) scheduling determinations for removing a substance from Schedule I are dependent on FDA approval of a substance or a specific formulation of a substance for therapeutic or medicinal use. Unless and until psilocybin, psilocin, or other psychedelics-based products receive FDA approval, such products are prohibited from sale, which limits the growth opportunities for certain companies held by the Fund. Even if approved by the FDA, the manufacture, importation, exportation, domestic distribution, storage, sale, and legitimate use of such products will continue to be subject to a significant degree of regulation by the DEA. There can be no guarantees that such approvals or administrative actions will happen or be favorable for psychedelics companies. Such actions may be subject to lengthy delays and may require lengthy and expensive clinical trials. Additionally, therapies containing controlled substances may generate public controversy and carry reputational risk. Political and social pressures and adverse publicity could lead to delays in approval of, and increased expenses for, psychedelics companies and many future therapeutic candidates they may develop. All of these factors and others may prevent psychedelics companies from becoming profitable, which may materially affect the value of certain Fund investments.
The Fund is considered to be non-diversified, which means that it may invest more of its assets in the securities of a single issuer or a smaller number of issuers than if it were a diversified fund. As a result, the Fund may be more exposed to the risks associated with and developments affecting an individual issuer or a smaller number of issuers than a fund that invests more widely. This may increase the Fund’s volatility and cause the performance of a relatively smaller number of issuers to have a greater impact on the Fund’s performance.
The Fund is distributed by Quasar Distributors, LLC.
Contacts
Media:
Sarah Griffin
T: 617.285.0432
E: sarah@kaneandhook.com
