The asset manager revealed in its Annual Management Report of Fund Performance for the year ended December 31, 2017 that not owning cannabis stocks was a drag on performance for its Canadian Small Cap Equity Pooled Fund, which ended the year with C$81 million under management: The Fund’s stock selection contributed to strong performance, while its sector positioning detracted.
The company didn’t quantify the impact, and the net results were still positive, with the fund returning 6.82% compared to the 6.38% return in the benchmark index, the BMO Small Cap Weighted Index.
In 2017, the only names that could have been eligible for inclusion in the index due to trading on the TSX would have been Aphria (TSX: APH) (OTC: APHQF), Aurora Cannabis (TSX: ACB) (OTC: ACBFF), CanniMed Therapeutics (TSX: CMED) (OTC: CMMDF), Canopy Growth (TSX: WEED) and MedReleaf (TSX: LEAF) (OTC: MEDFF), though CannTrust (TSX: TRST) (OTC: CNTTF) recently uplisted from the CSE to the TSX.
As the cannabis sector becomes a larger part of the Canadian equity markets, fund managers will increasingly need to make a conscious decision to invest or, if not, to run the risk of performance deviations.
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