The $120 billion fund manager is finding winners in cannabis stocks as countries increasingly move to legalise marijuana for medicinal use.
As part of a $1 billion small caps strategy, IFM Investors has backed companies that have exposure to medicinal cannabis, hemp and CBD oil.
"There's always new sectors emerging in small caps. If you thing back a few years ago, we had the infant formula stocks that had a fantastic run. For the moment, we are seeing the cannabis space in a similar kind of nascent phase," IFM global listed equities co-head Neil Carter said.
One of its picks is the Barry Lambert-backed hemp producer Ecofibre (ASX: EOL) which is currently up 70% on its ASX debut in late March.
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Another of IFM's cannabis investments has been even more rewarding. Elixinol Global which operates in emerging medical cannabis sectors has risen almost three times since its listing at $1.80 in January last year to over $5 last Thursday.
Cannabis stocks currently account for 1.5% of IFM's $1 billion small caps assets.
"We see the sector growing very strongly. We have a long-term exposure to it," Carter said.
"Cannabis has been effectively legalised for medicinal purposes in many jurisdictions including in US, Canada, Germany so the market is growing exponentially at the moment," Carter said.
IFM Investors manages $27 billion in its listed equities business.