How does the CNBS ETF attempt to achieve its investment objective?

The CNBS ETF uses an indexing approach and employs a representative sampling strategy. It invests in a representative sample of securities that collectively have an investment profile similar to the Dow Jones U.S. Select Insurance Index, which includes large-, mid-, or small-capitalization insurance companies.

What is the underlying index that the CNBS ETF tracks?

The CNBS ETF tracks the Dow Jones U.S. Select Insurance Index, a benchmark that measures the performance of the insurance sector of the U.S. equity market, as defined by S&P Dow Jones Indices LLC.

How is the CNBS ETF different from actively managed investment companies?

Unlike actively managed funds, the CNBS ETF does not try to "beat" the index it tracks. Instead, it aims to replicate the performance of its underlying index. This indexing strategy seeks to achieve lower costs and better after-tax performance.

What are the primary holdings of the CNBS ETF?

As of March 31, 2023, a significant portion of the CNBS ETF is represented by securities of companies in the insurance industry or sector. However, the exact composition of the holdings may change over time.

5 min read

By Ron Koren, ETF Insider

What is the CNBS ETF ?

In the world of finance, Exchange-Traded Funds (ETFs) have become increasingly popular for investors seeking exposure to specific industries or sectors. One such ETF that has caught the attention of many investors is the CNBS ETF. This article will provide a comprehensive overview of the CNBS ETF, exploring its underlying assets, investment strategy, benefits, and key considerations before investing.
The CNBS ETF, formally known as the Cannabis ETF, is an actively managed exchange-traded fund that aims to provide investment exposure to global companies primarily engaged in the emerging cannabis and hemp ecosystem. The fund is managed by Amplify Investments LLC, and the investment decisions are executed by Penserra Capital Management LLC, serving as the sub-adviser.

CNBS ETF: Overview

The CNBS ETF's primary objective is to invest in companies involved in cannabis and hemp-related activities. To achieve this objective, the fund allocates at least 80% of its net assets to companies that generate 50% or more of their revenue from the cannabis and hemp ecosystem, including derivatives with similar economic characteristics. The fund is classified as "non-diversified" under the Investment Company Act of 1940, meaning it may focus its investments in a smaller number of companies.

CNBS ETF Underlying and Exposure: What Does it Track and How?

The CNBS ETF invests primarily in equity securities and derivative instruments intended to provide exposure to companies principally engaged in the cannabis and hemp ecosystem. It seeks to capture opportunities in one of three classifications within the sector:

Cannabis/Hemp Plant: Including Pharmaceuticals/Biotechnology, Cultivation & Retail, Hemp Products, and Cannabis-Infused Products.
Support: Encompassing Agricultural Technology, Real Estate, and Commercial Services.
Ancillary: Involving Consumption Devices/Mechanisms, Investing & Finance, Technology & Media, and Other Ancillary services.
The fund's portfolio manager, Tim Seymour, actively seeks investment opportunities within these classifications by utilizing information from public regulatory filings, third-party research, meetings with company management, and other publicly available sources. The manager employs a fundamental analysis approach, considering both top-down factors (regulatory changes, macro-economic data, and political events) and bottom-up factors (company growth rates, financial strength, management quality, environmental and social factors).

CNBS overlap What is the CNBS ETF ?

CNBS ETF: Benefits to Invest in this ETF

Investing in the CNBS ETF offers several potential benefits. For investors interested in gaining exposure to the burgeoning cannabis and hemp industry, this ETF provides a diversified and efficient way to participate in its growth. The actively managed nature of the fund allows the portfolio manager to take advantage of market pricing dislocations and dynamically adjust the portfolio as the industry evolves. Additionally, the CNBS ETF provides exposure to companies from different market capitalizations and geographies, offering potential opportunities in both emerging and developed markets.

CNBS ETF: Considerations Before Investing

While the CNBS ETF presents attractive investment opportunities, potential investors must be aware of certain considerations before investing. As an actively managed fund, the success of the ETF heavily relies on the skills and judgment of the portfolio manager. The cannabis and hemp industry is relatively young and can be subject to regulatory changes and geopolitical risks, which may affect the performance of the ETF. Moreover, investing in a non-diversified fund entails higher individual stock risk compared to diversified funds, as a significant portion of the assets are concentrated in a smaller number of companies.

Conclusion:

The CNBS ETF offers investors a unique opportunity to gain exposure to the fast-growing cannabis and hemp ecosystem. By investing in a diversified portfolio of companies within this sector, investors can potentially capitalize on the industry's growth and development. However, it's essential to carefully consider the risks and benefits associated with investing in the CNBS ETF and to align it with one's overall investment strategy.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. It does not provide any investment advisory services, and individuals should conduct their own research or consult with a qualified financial advisor before making any investment decisions.

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FAQ

What is the CNBS ETF?
The CNBS ETF, also known as the iShares U.S. Insurance ETF, is an exchange-traded fund that aims to track the investment results of the Dow Jones U.S. Select Insurance Index, representing the performance of the insurance sector of the U.S. equity market.
How does the CNBS ETF attempt to achieve its investment objective?
The CNBS ETF uses an indexing approach and employs a representative sampling strategy. It invests in a representative sample of securities that collectively have an investment profile similar to the Dow Jones U.S. Select Insurance Index, which includes large-, mid-, or small-capitalization insurance companies.
What is the underlying index that the CNBS ETF tracks?
The CNBS ETF tracks the Dow Jones U.S. Select Insurance Index, a benchmark that measures the performance of the insurance sector of the U.S. equity market, as defined by S&P Dow Jones Indices LLC.
How is the CNBS ETF different from actively managed investment companies?
Unlike actively managed funds, the CNBS ETF does not try to "beat" the index it tracks. Instead, it aims to replicate the performance of its underlying index. This indexing strategy seeks to achieve lower costs and better after-tax performance.
What are the primary holdings of the CNBS ETF?
As of March 31, 2023, a significant portion of the CNBS ETF is represented by securities of companies in the insurance industry or sector. However, the exact composition of the holdings may change over time.

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