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Best ETF Areas of Q1

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The rollout of the $1.9 trillion of fiscal support from the Biden administration, growing distribution of vaccines and the starting of the economic reopening were the key highlights of the first quarter of 2021. However, the quarter also faced some concerns whole closing out as COVID-cases started rising globally.

There were some disbalances in the financial markets too in the quarter in the form of Reddit Frenzy (that made stocks like GameStop a star overnight) and Archegos’ default on margin call and the resultant selling of its holdings by some renowned banks (read: Marijuana ETFs on a High on Reddit Frenzy).

Rising rate worries and fears of tax rate hike in the United States also dampened investors sentiments in March. The benchmark U.S. treasury yield went up to 1.73% on Mar 29, 2021 from 0.93% at the start of the year. Overall, S&P 500 Index, the Dow Jones, the Nasdaq and the Russell 2000 gained about 6.2%, 9%, 1.5% and 12.1% respectively, in the quarter (as of Mar 30, 2021).

Against this backdrop, below we highlight a few winning ETF areas of the first quarter.

Shipping

The shipping ETF that tracks the Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC Index measure rates for shipping dry bulk freight was crowned the best ETF of Q1. The pickup in global economic growth has supported the dry bulk shipping rates. Gradually rising demand across all vessel categories have mainly aided the area and the related fund (read: Top & Flop Zones of 2020 and Their ETFs).

Plus, Suez Canal blockage by a massive ship lately worked wonder for shipping rates in late March as the incident has caused disruptions in shipping and tends to push shipping rates higher (read: ETFs to Win/Lose on Suez Canal Blockage).

Breakwave Dry Bulk Shipping ETF BDRY – Up 116.1%

Blockchain

The first quarter was great for the price of Bitcoin. It crossed the $60,000-mark for the first time this quarter. Bitcoin has soared about 100% this year driven by institutional interest (read: Bitcoin at Record $60K: Which Way ETFs are Headed?). 

Corporations’ increased acceptance in allowing customers to hold bitcoin and other virtual coins in their online wallets and several central banks’ intention of rolling out digital currencies have been favoring the cryptocurrency (read: Will Fidelity's Bitcoin ETF See the Light of Day?).

Since investors cannot lay their hands on a bitcoin ETF now, they definitely familiarized themselves with the concept through blockchain ETFs like Amplify Transformational Data Sharing ETF BLOK. Notably, the blockchain technology in bitcoin keeps track of the balances for all users and updates them on each transaction.

Transformational Data Sharing Amplify ETF (BLOK) – Up 56.8%

Cannabis

The cannabis companies have received a boost from the Biden’s Democratic Party’s intentions to legalize the plant at the federal level. Additionally, the deal activities as well as Reddit frenzy have strengthened the bullish case for these stocks. Hence, shares of major cannabis stocks have rallied this year massively. Most recently, shares of Ascend Wellness Holdings Llc, one of the largest U.S.-based cannabis operators, filed for an initial public offering of up to $125 million, as investor demand for U.S. marijuana companies is on the rise.

Amplify Seymour Cannabis ETF CNBS – Up 54.2%

Alternative Harvest ETF (MJ) – Up 52.5%

Small-Caps

Small-cap stocks put a great show in Q1 as this spectrum is more domestically-exposed. Biden’s massive stimulus and a rising greenback have favored small-caps more than the large caps that have greater exposure to foreign shores. Plus, the below-mentioned ETFs had put considerable assets on the super-hot GameStop stock in the quarter and thus benefited greatly (read: How to Trade GameStop Trading Frenzy With ETFs).

Smallcap Revenue ETF Oppenheimer RWJ – Up 39.5%

Invesco S&P Smallcap Value With Momentum ETF (XSVM) – Up 37.6%

Energy

Oil prices made a comeback recently, buoyed by the continuation of the OPEC output cut and economic improvement globally. Vaccine and U.S. fiscal stimulus optimism have also led to the rally. United States Oil Fund LP (USO) and United States Brent Oil Fund LP BNO gained about 27.9% and 28.6%, respectively, in Q1.

Unconventional Oil & Gas Vaneck ETF FRAK – Up 45.0%

S&P Smallcap Energy Invesco ETF (PSCE) – Up 42.5%

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