Global X Marijuana Life Science Index ETF (HMMJ)

Overview

The described fund is an investment vehicle that focuses on the equity securities market, specifically targeting the life sciences and marijuana industries in North America. By investing in both equity securities and American Depositary Receipts (ADRs) in proportions similar to its underlying index, the fund aims to provide investors with a diversified portfolio that reflects the market's performance in these sectors. The securities within the fund are meticulously selected from companies listed on North American stock exchanges that are either directly involved in the life sciences sector—including biopharmaceuticals, medical manufacturing, distribution, and bio products—or have significant business operations within the marijuana industry. To ensure the fund's alignment with market dynamics while maintaining diversification, the portfolio is rebalanced quarterly and adheres to a market-cap-weighted strategy, with a cap of 10% on the allocation to any single constituent.

Products and Services

• Equity Securities Investment

Investments in equity securities form the core of the fund's strategy, focusing on shares of life sciences companies and those within the marijuana industry. This includes direct investments in the stocks of companies engaged in biopharmaceuticals, medical device manufacturing, and distribution, as well as companies dealing with bio products and other relevant sectors. The objective is to capture the growth and value-generation potential of these industries.

• American Depositary Receipts (ADRs) Investment

The fund also allocates a portion of its assets to ADRs, which are negotiable certificates issued by U.S. banks representing a specified number of shares in a foreign stock for trading on American stock exchanges. This allows the fund to gain exposure to international companies within the life sciences and marijuana sectors, broadening its diversification and potential for returns.

• Market-Cap-Weighted Portfolio Strategy

The portfolio’s market-cap-weighted strategy ensures that investments are proportionately based on the market capitalization of the constituent companies. This approach reflects the market size of each company within the portfolio, favoring larger, more stable companies while still providing exposure to smaller entities within the predefined sectors. The weighting strategy is complemented by a quarterly rebalancing to adjust for market movements and maintain the fund’s strategic asset allocation.

• Quarterly Rebalancing

To align with the dynamic nature of the equity markets and maintain the portfolio’s adherence to its investment strategy, the fund is rebalanced on a quarterly basis. This process involves adjusting the composition of the portfolio to ensure it remains consistent with the fund’s market-cap-weighting approach and to respond to changes within the targeted industries. The rebalancing keeps individual constituents’ weightings within set limits, preserving diversification and managing risk.

• 10% Maximum Capping per Constituent

A distinctive feature of the fund’s investment strategy is the imposition of a 10% maximum capping on the investment in any single constituent. This limit is designed to prevent over-concentration in any one stock, thereby reducing risk and ensuring a more diversified and resilient portfolio. This capping is an important risk management tool, especially given the volatility and rapid changes that can occur in the life sciences and marijuana sectors.