Although a cannabis ETF launched in April, investors are still likely to find more value in buying individual stocks in the sector, according to traders.

The Horizons Medical Marijuana Life Sciences ETF (HMMJ.TO) launched in April and could spur additional ETFs in the cannabis sector, but traders are cautious about this new investment. The fund includes both American and Canadian stocks with Insys Therapeutics (INSY) as its largest holding, consisting of 10.72% of its assets, followed by Aurora Cannabis (ACB) at 10.04% and Scotts Miracle-Gro Company (SMG) at 9.8%.

"Although we are favorable to this development, we were concerned with its launch at the time due to the valuations of some of its holdings," said Michael Berger, founder of Technical420, a Miami-based company that conducts research on cannabis stocks, and a former Raymond James energy analyst. "While we think this is a good approach, we are cautious having a passive approach in a sector as volatile as the cannabis industry."

The fund is down 13% since inception, following a pullback from the highs in Canada's cannabis industry has pulled back from its highs.

While sector ETFs have traditionally posed less of a risk for retail investors who are loath to invest in individual stocks, cannabis ETFs could be ahead of their time, said Jason Spatafora, co-founder of and a Miami-based trader and investor known as @WolfofWeedST on Twitter.

"I'm of the opinion that it's still relatively early for these ETFs," he said.

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