Yahoo Finance Best and Worst ETF Zones of Q2
After the worst monthly decline in many months in April, global stock markets have staged a nice comeback on renewed Fed rate cut bets, ongoing artificial intelligence (AI) developments and strong corporate profits. With just a few trading days left to end the second quarter, the S&P 500 and the Nasdaq Composite Index are up 3.7% and 6.8%, respectively. The Dow Jones has underperformed, losing nearly 1% so far.
Most central banks across the globe started easing monetary policies while the Federal Reserve is expected to cut rates sometime later this year. The Fed, in its latest meeting, penciled in one rate cut for this year. It foresees four cuts for 2025. The Bank of Canada this month lowered its benchmark rate for the first time in four years and the European Central Bank cut its rate for the first time since 2019. The Swiss National Bank also reduced rates for the second time in the last three months. Sweden’s central bank cut its policy interest rate in May for the first time in eight years. All these have fueled optimism over a looser monetary policy.
Technology remained the best-performing sector of the second quarter on the AI drive while energy lagged (read: Here's Why Tech ETFs Will Continue Their Bull Run).
On the commodity side, precious metals like gold and silver and base metals like copper performed well during the second quarter. These metals have reached a multi-year high. Rate cut bets and geopolitical tension drive up the price for both the precious metals, which are considered a store of wealth for investors. Copper prices are rallying on bullish long-term trends and tight supply conditions amid a rush to build data centers and the continued electrification of the global economy.
We have highlighted three ETFs each from the best and worst-performing zones in the second quarter of 2024.
Best ETFs
Bitcoin - Valkyrie Bitcoin Miners ETF (WGMI) – Up 26.5%
Though the bitcoin price dropped below $60,000, investors’ interest in the mining sector surged following Core Scientific's (CORZ) deal with AI company CoreWeave in early June. Core Scientific signed a 200 megawatts (MW) artificial intelligence deal with the cloud computing firm that triggered a re-rating of the bitcoin mining sector as investors reacted positively to the announcement (read: Will Bitcoin ETFs Soar on Sooner-Than-Expected Fed Rate Cut?).
Valkyrie Bitcoin Miners ETF is an actively managed ETF that invests at least 80% of its net assets (plus borrowings for investment purposes) in securities of companies that derive at least 50% of their revenues or profits from bitcoin mining operations and/or from providing specialized chips, hardware and software or other services to companies engaged in bitcoin mining. Valkyrie Bitcoin Miners ETF holds 21 stocks in its basket with a double-digit concentration on the top two firms. It has amassed $137.8 million in its asset base while trading in an average daily volume of 341,000 shares. WGMI charges 75 bps in annual fees.
Natural Gas - United States Natural Gas Fund (UNG) – Up 25.5%
Natural gas prices are on the rise, driven by the hotter-than-expected weather forecast and cooling demand in the summer months. Prices increased despite the fact that producers ramped up output to meet the heightened demand from power generators. United States Natural Gas Fund provides direct exposure to the price of natural gas on a daily basis through futures contracts. If the near-month contract is within two weeks of expiration, the benchmark will be the next month's contract to expire. The natural gas contract is for natural gas delivered at Henry Hub, LA.
The United States Natural Gas Fund has an AUM of $711.9 million and trades in a volume of around 7 million shares per day. UNG has a 1.06% expense ratio.
Silver - iShares MSCI Global Silver and Metals Miners ETF (SLVP) – Up 24.6%
Silver broke $30 per ounce for the first time in decades last month, bolstered by fresh bets on a Fed rate cut. A projected fourth annual market deficit, increased industrial demand, rising geopolitical tension and uncertainties ahead of general elections in major economies added to the strength. In fact, silver miners are the biggest beneficiaries of a surge in silver prices. These act as a leveraged play on underlying metal prices and thus tend to experience more gains than their bullion cousins in a rising metal market.
iShares MSCI Global Silver and Metals Miners ETF follows the MSCI ACWI Select Silver Miners Investable Market Index, providing investors exposure to companies that derive the majority of revenues from silver exploration or metals mining. It holds 29 stocks in its basket, with Canadian firms making up the lion’s share at 66.2%, while the United States and Mexico round off the next spots. iShares MSCI Global Silver and Metals Miners ETF has AUM of $226.6 million and an average daily volume of about 174,000 shares. It charges 39 bps in annual fees.
Worst ETFs
Biotechnology - AdvisorShares Psychedelics ETF (PSIL) – Down 27.8%
AdvisorShares Psychedelics ETF invests in the emerging psychedelic drugs sector, offering exposure to those biotechnology, pharmaceutical and life sciences companies, which AdvisorShares sees as leading the way in this nascent industry. It is an actively managed fund and holds 26 stocks in its basket with a heavy concentration on the top firm.
AdvisorShares Psychedelics ETF has accumulated $5.8 million in its asset base and charges 99 bps in annual fees. It trades in an average daily volume of 54,000 shares (read: ETFs to Profit from the Weight Loss Drug Boom).
Cannabis - Roundhill Cannabis ETF (WEED) – Down 25%
After surging on the potential reclassification of marijuana as a less dangerous drug early in the quarter, cannabis stocks fell drastically as the hype cooled down due to slower progress on the legalization front. Cannabis is a long way from being treated like alcohol or tobacco.
Roundhill Cannabis ETF is designed to offer concentrated exposure to the largest U.S. cannabis companies. The fund may invest in various cannabis-related companies, including cannabis producers and distributors, cannabis-related technology companies and additional cannabis-related ancillary businesses. It offers precise exposure to five leading U.S. MSOs. Roundhill Cannabis ETF has gathered $5.6 million in its asset base so far. It charges 40 bps in annual fees and trades in 6,000 shares a day on average.
Shipping - Breakwave Dry Bulk Shipping ETF (BDRY) – Down 20%
Dry bulk shipping rates have been falling due to excess tonnage in the Atlantic basin and the impact of decreasing oil prices. Breakwave Dry Bulk Shipping ETF is the only freight futures ETF exclusively focused on the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule.
Breakwave Dry Bulk Shipping ETF has accumulated about $38.6 million in AUM and trades in a good volume of about 218,000 shares per day on average. It charges a higher annual fee of 3.50%.
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iShares MSCI Global Silver and Metals Miners ETF (SLVP): ETF Research Reports
United States Natural Gas ETF (UNG): ETF Research Reports
Breakwave Dry Bulk Shipping ETF (BDRY): ETF Research Reports
AdvisorShares Psychedelics ETF (PSIL): ETF Research Reports
Valkyrie Bitcoin Miners ETF (WGMI): ETF Research Reports
Roundhill Cannabis ETF (WEED): ETF Research Reports
