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Global stock markets wrapped up one of the best quarters, with the MSCI index of world shares rising 7.7%, its best performance in five years. Hopes of a soft economic landing in the United States and enthusiasm about artificial intelligence drove the stocks higher.
Notably, the S&P 500 Index logged the best first-quarter performance in five years, having gained 10.2%, while the Dow Jones had its strongest first-quarter performance since 2021, advancing 5.6%. Meanwhile, the Nasdaq Composite Index popped 9.1% (read: 5 Best Stocks That Powered the S&P 500 ETF in Q1).
Bitcoin and the related stocks were the hottest throughout the first quarter amid growing optimism about the tokens. The energy sector led the gains in March. On the commodity side, gold regained sheen on expectations of upcoming U.S. interest rate reductions. Traditionally viewed as a safe haven during periods of economic uncertainty, gold's appeal has surged given the forthcoming U.S. presidential election and conflicts in Ukraine and Gaza. Silver and other precious metals also gained.
In agriculture commodities, cocoa prices have more than doubled in just three months, skyrocketing to $10,000 a ton from $3,000 a ton at the start of the year. A third consecutive year of supply shortages caused by poor harvests in West Africa led to the surge.
Given this, we have highlighted three ETFs, each from the best and worst-performing zones, in the first quarter of 2024.
Bitcoin, the world's largest cryptocurrency, has been on an unstoppable rally as the demand for the token is widening beyond committed digital-asset enthusiasts following the launch of spot Bitcoin ETFs. A looming reduction in the digital token’s supply growth (halving event) is also contributing to its huge rally.
Grayscale Bitcoin Trust is the world’s largest Bitcoin ETF that enables investors to gain exposure to Bitcoin in the form of security while avoiding the challenges of buying, storing and safekeeping Bitcoin directly. It owns and passively holds actual Bitcoins through the Custodian, Coinbase Custody. Grayscale Bitcoin Trust has an AUM of $23 billion and charges 1.50% in annual fees from investors. It trades in a volume of 17 million shares a day on average.
Cannabis stocks and ETFs have been on a surge on speculations over the potential reclassification of marijuana as a less dangerous drug. A reclassification could potentially expand the market for marijuana, which is a multi-billion-dollar industry in the United States and a cash crop in many states where cannabis has been newly legalized (read: Cannabis ETFs Jump on Imminent Rescheduling News).
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 $6.9 million in its asset base so far. It charges 40 bps in annual fees and trades in 6,000 shares a day on average.
The semiconductor sector is performing well this year, driven by the expansion of artificial intelligence (AI) applications, which are ushering in fresh opportunities for growth within the sector. Additionally, a spate of strong earnings reports from well-known players in the space has instilled confidence in the sector (read: 5 Market-Beating Sector ETFs of Q1).
VanEck Vectors Semiconductor ETF offers exposure to the companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which measures the overall performance of companies involved in semiconductor production and equipment. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket and has managed assets worth $18.4 billion. It charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 9 million shares per day and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Worst ETFs
United States Natural Gas Fund (UNG - Free Report) ) – Down 28.2%
Natural gas price declined due to an increased surplus of working natural gas stocks and record-high levels of natural gas production. 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 $809 million and trades in a volume of around 6 million shares per day. UNG has a 1.06% expense ratio.
Invesco WilderHill Clean Energy ETF (PBW - Free Report) ) – Down 21.9%
Invesco WilderHill Clean Energy ETF offers exposure to companies that are publicly traded in the United States and are engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds 73 stocks in its basket.
Invesco WilderHill Clean Energy ETF has amassed $361.1 million in its asset base and trades in a solid volume of around 262,000 shares a day. It charges investors 66 bps in fees per year.
Lithium prices have plunged this year as a broader slowdown in the China economy took a toll on sales of electric vehicles in China. Sprott Lithium Miners ETF is the pure-play U.S.-listed ETF focused on lithium mining companies that are providing the critical mineral necessary for the clean energy transition. It follows the Nasdaq Sprott Lithium Miners Index, holding 45 stocks in its basket.
Sprott Lithium Miners ETF has gathered $5.9 million in its asset base and charges 65 bps in annual fees. It trades in an average daily volume of 12,000 shares.
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Best and Worst ETF Zones of Q1
Global stock markets wrapped up one of the best quarters, with the MSCI index of world shares rising 7.7%, its best performance in five years. Hopes of a soft economic landing in the United States and enthusiasm about artificial intelligence drove the stocks higher.
Notably, the S&P 500 Index logged the best first-quarter performance in five years, having gained 10.2%, while the Dow Jones had its strongest first-quarter performance since 2021, advancing 5.6%. Meanwhile, the Nasdaq Composite Index popped 9.1% (read: 5 Best Stocks That Powered the S&P 500 ETF in Q1).
Bitcoin and the related stocks were the hottest throughout the first quarter amid growing optimism about the tokens. The energy sector led the gains in March. On the commodity side, gold regained sheen on expectations of upcoming U.S. interest rate reductions. Traditionally viewed as a safe haven during periods of economic uncertainty, gold's appeal has surged given the forthcoming U.S. presidential election and conflicts in Ukraine and Gaza. Silver and other precious metals also gained.
In agriculture commodities, cocoa prices have more than doubled in just three months, skyrocketing to $10,000 a ton from $3,000 a ton at the start of the year. A third consecutive year of supply shortages caused by poor harvests in West Africa led to the surge.
Given this, we have highlighted three ETFs, each from the best and worst-performing zones, in the first quarter of 2024.
Best ETFs
Bitcoin - Grayscale Bitcoin Trust (GBTC - Free Report) ) – Up 92.5%
Bitcoin, the world's largest cryptocurrency, has been on an unstoppable rally as the demand for the token is widening beyond committed digital-asset enthusiasts following the launch of spot Bitcoin ETFs. A looming reduction in the digital token’s supply growth (halving event) is also contributing to its huge rally.
Grayscale Bitcoin Trust is the world’s largest Bitcoin ETF that enables investors to gain exposure to Bitcoin in the form of security while avoiding the challenges of buying, storing and safekeeping Bitcoin directly. It owns and passively holds actual Bitcoins through the Custodian, Coinbase Custody. Grayscale Bitcoin Trust has an AUM of $23 billion and charges 1.50% in annual fees from investors. It trades in a volume of 17 million shares a day on average.
Roundhill Cannabis ETF (WEED - Free Report) ) – Up 45.1%
Cannabis stocks and ETFs have been on a surge on speculations over the potential reclassification of marijuana as a less dangerous drug. A reclassification could potentially expand the market for marijuana, which is a multi-billion-dollar industry in the United States and a cash crop in many states where cannabis has been newly legalized (read: Cannabis ETFs Jump on Imminent Rescheduling News).
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 $6.9 million in its asset base so far. It charges 40 bps in annual fees and trades in 6,000 shares a day on average.
VanEck Vectors Semiconductor ETF (SMH - Free Report) ) – Up 28.7%
The semiconductor sector is performing well this year, driven by the expansion of artificial intelligence (AI) applications, which are ushering in fresh opportunities for growth within the sector. Additionally, a spate of strong earnings reports from well-known players in the space has instilled confidence in the sector (read: 5 Market-Beating Sector ETFs of Q1).
VanEck Vectors Semiconductor ETF offers exposure to the companies involved in semiconductor production and equipment. SMH follows the MVIS US Listed Semiconductor 25 Index, which measures the overall performance of companies involved in semiconductor production and equipment. VanEck Vectors Semiconductor ETF holds 26 stocks in its basket and has managed assets worth $18.4 billion. It charges 35 bps in annual fees and expenses. SMH is heavily traded with a volume of 9 million shares per day and has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.
Worst ETFs
United States Natural Gas Fund (UNG - Free Report) ) – Down 28.2%
Natural gas price declined due to an increased surplus of working natural gas stocks and record-high levels of natural gas production. 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 $809 million and trades in a volume of around 6 million shares per day. UNG has a 1.06% expense ratio.
Invesco WilderHill Clean Energy ETF (PBW - Free Report) ) – Down 21.9%
Invesco WilderHill Clean Energy ETF offers exposure to companies that are publicly traded in the United States and are engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds 73 stocks in its basket.
Invesco WilderHill Clean Energy ETF has amassed $361.1 million in its asset base and trades in a solid volume of around 262,000 shares a day. It charges investors 66 bps in fees per year.
Lithium - Sprott Lithium Miners ETF (LITP - Free Report) ) – Down 20.7%
Lithium prices have plunged this year as a broader slowdown in the China economy took a toll on sales of electric vehicles in China. Sprott Lithium Miners ETF is the pure-play U.S.-listed ETF focused on lithium mining companies that are providing the critical mineral necessary for the clean energy transition. It follows the Nasdaq Sprott Lithium Miners Index, holding 45 stocks in its basket.
Sprott Lithium Miners ETF has gathered $5.9 million in its asset base and charges 65 bps in annual fees. It trades in an average daily volume of 12,000 shares.