First cannabis, and now psychedelics.
As these once-verboten substances increasingly gain wider medical and mainstream consumer acceptance for the treatment of various physical or mental ills (and recreational use regarding cannabis), it’s no surprise that the exchange-traded fund industry has zeroed in on these trends as potentially profitable thematic investment opportunities.
The latest product to hit the shelf is the AdvisorShares Psychedelics ETF (PSIL), an actively managed fund set to debut tomorrow. The fund is overseen by Dan Ahrens, whose credits include his current duties as portfolio manager of two AdvisorShares cannabis ETFs. These compete with seven other cannabis exchange-traded products (including two exchange-traded notes).
The PSIL fund is the second U.S.-listed ETF—and the third one in North America—that targets the growing industry involving psychedelics as therapies for mental disorders. But it’s the first one in this category that’s actively managed.
PSIL invests in biotechnology, pharmaceutical and mental health companies with a strong focus on psychedelic medicines and treatments. That means they must get at least half of their net revenue or dedicate 50% of their assets to medicinal psychedelics.
Psychedelic therapies can include a host of substances. The best known are LSD, psilocybin (the secret sauce in hallucinogenic mushrooms) and MDMA, otherwise known as ecstasy. But there are other substances being tested for conditions ranging from depression and post-traumatic stress disorder to anxiety and addiction disorders.
And the field is increasingly expanding with prestigious medical institutions, including Johns Hopkins University in Baltimore, Massachusetts General Hospital in Boston and Mount Sinai Health System in New York City, adding their imprimatur to this field through their research in medical psychedelics.
According to AdvisorShares, there are 43 human clinical trials involving psychedelic treatments, and 29 companies have psychedelic-based drugs either in the development process or in the preclinical phase.
Ahrens believes active management will enable the PSIL fund to be more nimble and opportunistic than its two index-tracking rivals in the nascent but growing medicinal psychedelics space.
Many psychedelic drugs—including LSD, psilocybin and MDMA—are classified as Schedule I drugs in the U.S. with no currently accepted medical use and a high potential for abuse. It’s illegal to possess or distribute Schedule I drugs.