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Top & Flop Zones at Half-Way Q1 & Their ETFs

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Global stocks kicked off 2021 on a solid note with the longest winning streak in 17 years. Most of the rally came from the roaring U.S. stock market, which has been hitting record highs with new milestones.

The wider rollout of COVID-19 vaccines and the likelihood of another U.S. stimulus are expected to boost the pandemic-hit global economy, in turn, raising the appeal for riskier assets. Continued monetary stimulus, better-than-expected earnings as well as easing of lockdowns and stricter measures around the world added to the strength.

In the commodity world, while the shine for gold and silver is waning, the industrial metals and energy have become red-hot lately. The industrial metals are surging on optimism over the economic recovery. Copper has hit the peak since 2012, platinum jumped to six-year high and tin extended a dramatic surge. Meanwhile, oil price jumped to a 13-month high as the cold blast raised concerns over supply disruption, shutting oil refineries and forcing restrictions from natural gas pipeline operators (read: Will the Energy ETFs See a Sustained Rally?).

Given this, we have highlighted the best and worst-performing zones and their ETFs halfway through first-quarter 2021:

Best Zones

Shipping

Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) has gained the most, surging 116.4% so far this year on rising dry bulk shipping rates. The expectation of a speedy global economic recovery has brightened the demand outlook for all vessel categories, leading to spike in the rates. The fund provides exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. The fund has accumulated about $21.5 million in AUM and trades in a moderate volume of about 129,000 shares per day on average. It charges a higher annual fee of 3.32%.

Cannabis

Cannabis stocks have been among the biggest winners to start 2021 buoyed by hopes of wider legalization and near-term decriminalization as well as the growing adoption of marijuana in more states. Additionally, the deal activities as well as Reddit frenzy have strengthened the bullish case for these stocks (read: Marijuana ETFs on a High on Reddit Frenzy).

Global X Cannabis ETF (POTX - Free Report) has surged 113%. It seeks to invest in companies across the cannabis industry and tracks the Cannabis Index. It holds 25 stocks in its basket, with Canadian firms accounting for 79% of assets while the United States and Britain take 10.5% and 6.9% share, respectively. The product has accumulated $115.4 million in its asset base and trades in an average daily volume of 699,000 shares. Expense ratio comes in at 0.50%.

Blockchain

A crypto crazy run has pushed the blockchain ETF like Amplify Transformational Data Sharing ETF (BLOK - Free Report) higher by 72.9%. This is especially true as bitcoin, the largest cryptocurrency, topped $51,000 for the first time ever. The crypto is up 73% so far this year. The fund is actively managed, providing investors global exposure to a basket of the leading companies engaged in the development and utilization of blockchain technologies. It has AUM of $617.6 million in its asset base and trades in average daily volume of 699,000 shares. The product holds a basket of 54 stocks with American firms dominating about 56.8% of the portfolio, followed by Asia Pacific (36.8%). The ETF has an expense ratio of 0.70% (read: ETFs to Ride the Bitcoin Rally on Rising Popularity).

Worst Zones

Inverse Equity

As these ETFs benefit from a bear market, bullish market sentiments led to huge losses in this segment. AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) has plunged 12.8% at midway Q1. It is an actively managed ETF that short sells U.S. large-cap securities with the highest relative weakness within an investment universe, primarily comprising large-capitalization U.S.-traded equities. It holds 102 stocks in its basket and charges a higher annual fee of 3.67%. The product trades in moderate average daily volume of 76,000 shares and has accumulated $32.3 million in its asset base.

Treasury

Soaring yields took all the sheen away from the U.S. Treasury market. This is especially true as 10-year yields jumped to the level not seen since February 2020 at 1.29%. With AUM of $344 million, PIMCO 25+ Year Zero Coupon U.S. Treasury Index ETF (ZROZ - Free Report) has shed 11.3% so far this year. This ETF follows the BofA Merrill Lynch Long Treasury Principal STRIPS Index and holds 23 securities in its basket. Both effective maturity and effective duration of the fund are 27.33 years. The fund trades in a moderate average daily volume of 47,000 shares and charges 15 basis points (bps) in annual fees.

Gold

Gold logged in its worst performance in January since 2011 and extended its decline so far this month. Rising bond yields and rising dollar, which reflects improving economic outlook as well as pickup in inflation expectations, dampened the appeal for the yellow metal. Acting as a leveraged play on the underlying metal prices, metal miners tend to experience more losses than their bullion cousins in a declining metal market (read: U.S. Dollar Rising: ETF Winners & Losers).

While many gold mining ETFs have been experiencing losses, VanEck Vectors Junior Gold Miners ETF (GDXJ - Free Report) has lost 11.2%. It focuses on small-cap companies that are involved primarily in the mining for gold and/or silver by tracking the MVIS Global Junior Gold Miners Index. Holding 90 stocks in its basket, Canadian firms dominate the fund’s portfolio at 45.5%, while Australia (21.5%) and South Africa (7.6%) round out the top three. The product has AUM of $5.6 billion and charges 53 bps in annual fees. It trades in heavy volume of around 6.9 million shares a day on average.

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