Investors looking for the next big market to invest in should consider the new Horizons Psychedelic Stock Index ETF (TSX:PSYK). It’s a first of its kind and the exchange-traded fund (ETF) began trading in January. It includes stocks from both Canada and the U.S. that are involved with psychedelics in one way or another.
A total of 17 companies are included in the ETF, with Numinus Wellness, Mind Medicine, and Compass Pathways each making up more than 9% of the fund’s total value. There are even a few big-name pharmaceutical companies included in the ETF, such as Johnson & Johnson (NYSE:JNJ) and AbbVie Inc. (NYSE:ABBV).
With a management fee of 0.85%, it’s a relatively modest expense for the exposure to the sector. The psychedelics industry is still in its very early stages, far behind even where the cannabis industry is today. According to Data Bridge Market Research, the psychedelic drugs market could be worth $6.85 billion by 2027, growing at an average annual rate of 16.3%.
In November, while five more states passed marijuana reform in the U.S., Oregon also made headlines when it became the first state in the country to legalize magic mushrooms while Washington, D.C. moved to decriminalize psychedelic plants. In 2019, Oakland and Denver were the first two cities in the U.S. to decriminalize psychedelic mushrooms.
Although there’s promise for the industry, investors will need to be patient. Compass Pathways, one of the more notable psychedelics stocks, is yet to generate revenue and it could be a long road before it becomes profitable.