Having led Claymore Securities’ (now Guggenheim Investments) move into ETFs during the mid-00s, Christian Magoon, founder and CEO of Amplify ETFs, has been at the forefront of the industry for close to two decades. In a lively discussion with Opto Sessions, Magoon explains why he believes in the investment potential of themes such as blockchain, lithium and cannabis.
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Christian Magoon is the founder and CEO of Amplify ETFs and Magoon Capital. Throughout his career so far, he has launched over 70 exchange-traded funds (ETFs) in the US and has often been referred to as an ‘ETF pioneer’ by outlets such as The Financial Times and Financial Planning Magazine.
Since the mid-2000s, Magoon has been first to market in launching ETFs for a variety of investing themes, including blockchain, solar and cybersecurity. His approach has been to “push the envelope” with innovative products covering themes ETF investors had previously lacked access to.
“We’re really focused on that,” Magoon told Opto Sessions, “because we think the ETF itself offers a lot of efficiency, transparency and flexibility for investors.”
The growth in popularity of ETFs has, he says, made getting to the market first for any given theme harder in recent years. His team closely monitors strategies and segments emerging that may potentially be desired by investors.
“We look at points like convenience, market demand, recent performance and behavioural bias in the markets.”
Blockchain’s transformative potential
One of Magoon’s most recent successes in being first-to-market for a theme was Amplify’s Transformational Data Sharing ETF [BLOK], which focuses on blockchain. Magoon said “[blockchain is a] foundational transformative technology that could have the impact of something like the internet”.
The premise of the ETF, Magoon says, “is to own companies that are actively engaged in blockchain-related business activities”. This includes everything from companies producing equipment that is used for blockchain proof of concept, to venture capital, financial or payment businesses that utilise blockchain technology.
“[blockchain is a] foundational transformative technology that could have the impact of something like the internet”.
There is some indirect crypto exposure in the fund too, but this is not the emphasis. Magoon believes that in the future, cryptocurrencies could be to blockchain what email or websites are now in relation to the internet. While email remains useful and brought early adopters of the internet on board, “we never envisioned some of the other applications like streaming and digital ads that have become key drivers of the internet economy.”
BLOK has gained 15.1% year-to-date, but is down 11.6% over the past month.
Lithium’s importance in battery tech
Another economic shift that Amplify’s product suite taps into is what Magoon calls “the electrification of fossil fuels”. While electric vehicles (EVs) are the flagship products for this trend, “whether it’s wind, solar or hydro, you need batteries”.
The Lithium & Battery Technology ETF [BATT] offers exposure to batteries through the EQM Lithium & Battery Technology Index, which holds companies producing key materials for this transition. Lithium is an obvious leader, but nickel, manganese, cobalt and others are also represented.
“Whether it’s wind, solar or hydro, you need batteries”.
Another 20% of the portfolio is in EV producers. Tesla [TSLA] is the fund’s top holding with an 8.15% weighting as of Thursday. The remaining 30% of holdings are in battery technology companies, giving the fund exposure to the theme’s producers, its largest end users, and the developers of battery technology.
BATT is flat year-to-date, and down 14.2% over the past month.
Cannabis’ ability to disrupt
Though it may seem counterintuitive, Magoon highlights the ways in which, from an investment perspective, the cannabis trend is similar to these other themes.
“Cannabis has the ability to potentially disrupt a variety of different industries.”
These include pharmaceuticals, with research currently examining the impact of cannabinoids on PTSD, sleep anxiety and other conditions. Similarly, there is potential for recreational cannabis to disrupt the alcohol industry.
Like blockchain and energy storage, further technological developments could mean that we are currently looking at the tip of the cannabis iceberg.
“Cannabis has the ability to potentially disrupt a variety of different industries”.
“There are over 100 cannabinoids that have been identified,” says Magoon. “THC is probably the one that most of us know about, [and] we've heard of CBD, but many others are being researched.”
Amplify’s Seymour Cannabis ETF [CNBS] is actively managed by cannabis investment expert Tim Seymour. The fund is down 14% year-to-date, and down 15.8% over the past month.
For investors who are unsure about which theme to invest in, Magoon and his team have also launched the Amplify Thematic All-Stars ETF [MVPS], which captures the stocks that are most widely owned by global thematic ETFs.
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