5 Top-Performing Sector ETFs of August



This story originally appeared on Zacks

The month of August was marked by ups and downs. After a strong start to the month, Wall Street saw a sharp sell-off on renewed aggressive Fed rate hike speculation. This has pushed the major indices to end the month with losses.
Despite the loss, a few sector ETFs were up in August. These include AdvisorShares Psychedelics ETF PSIL, Credit Suisse S&P MLP ETN MLPO, ETFMG U.S. Alternative Harvest ETF MJUS, North Shore Global Uranium Mining ETF URNM and iShares U.S. Oil & Gas Exploration & Production ETF IEO.



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How Markets Fared in August

Wall Street continued its summer rally to start August fueled by stronger-than-expected corporate earnings and hopes that the economy can avoid a recession even as the Federal Reserve raises rates to tame inflation. Easing inflation, a drop in Treasury yields and declining commodity prices provide fuel to the stocks. Notably, the Nasdaq Composite Index entered a bull market earlier this month while the Dow Jones reclaimed the 34,000 level (read: Growth ETFs Shining to Start Second Half: Here’s Why?).
However, the rally fizzled in recent weeks on Fed’s aggressive stance on monetary policy and renewed threats of recession. Jerome Powell said the Fed will likely need to keep interest rates high enough to slow the economy “for some time” in order to curb high inflation. While tight monetary policy “for some time” will bring down inflation from its 40-year high, it means slower growth, a weaker job market and “some pain” for households and businesses.
According to the CME FedWatch tool, nearly half of market participants expect the Fed funds rate to end the year above 3.7%, up from 40% participants a week ago. The Fed has raised its benchmark federal funds rate by 0.75 percentage point at each of its last two meetings to a range between 2.25% and 2.5%
AdvisorShares Psychedelics ETF (PSIL) – 28.8%
AdvisorShares Psychedelics ETF invests in the emerging psychedelic drugs sector, offering exposure to those biotechnology, pharmaceutical and life sciences companies we see as leading the way in this nascent industry. It is an actively managed fund and holds 33 stocks in its basket with double-digit concentration on the top two firms.
AdvisorShares Psychedelics ETF has accumulated $9.8 million in its asset base since its debut a year ago and charges 68 bps in annual fees. It trades in average dialy volume of 36,000 shares.
Credit Suisse S&P MLP ETN (MLPO) – Up 23%
Amid volatility in the stock market, this overlooked corner of the market is making great strides. MLPs have relatively consistent and predictable cash flows, making them safer and less risky than the other plays in the broader energy space. These represent an attractive investment option for income-focused investors as MLPs pay out substantially all of their income to investors on a regular basis. In addition to high yields and the potential for capital appreciation, MLPs also have lower volatility and provide diversification benefits to the portfolio.
Credit Suisse S&P MLP ETN is linked to the S&P MLP Index, which includes both master limited partnerships and publicly traded limited liability companies having a similar legal structure to MLPs and sharing the same tax benefits. It is unpopular and illiquid in the MLP space, with AUM of $29.7 million and an average daily volume of nearly 1,000 shares. The note charges 95 bps in annual fees.
ETFMG U.S. Alternative Harvest ETF (MJUS) – Up 12.6%
With bargain hunting and growth investing back in favor earlier in the month, cannabis stocks saw a huge boost. ETFMG U.S. Alternative Harvest ETF is designed to provide investors exposure to cannabis companies operating in the United States, including multi-state operators (MSOs) directly involved in the cultivation, production, marketing and distribution of cannabis or cannabis-related products. It holds 26 stocks in its basket with heavy concentration of the three firms.
ETFMG U.S. Alternative Harvest ETF has amassed $77.5 million in its asset base and charges 75 bps in annual fees. It trades in volume of 10,000 shares a day.
North Shore Global Uranium Mining ETF (URNM) – Up 11.8%
Uranimu mining ETFs powered up as more countries across the globe are planning to turn back on nuclear reactors in face of a growing energy crisis. North Shore Global Uranium Mining ETF provides exposure to companies involved in the mining, exploration, development and production of uranium, as well as companies that hold physical uranium or other non-mining assets. It follows the North Shore Global Uranium Mining Index and charges investors 85 bps in annual fee (read: Global Energy Crisis Boosts Uranium ETFs).
North Shore Global Uranium Mining ETF holds 35 stocks in its basket and has accumulated $936.5 million in its asset base. It trades in a good volume of 259,000 shares per day on average.
iShares U.S. Oil & Gas Exploration & Production ETF (IEO) – Up 7.7%
The energy sector outperformed as oil price rose on the possibility of an OPEC+ output cut and global supply threats due to the unrest in Libya. iShares U.S. Oil & Gas Exploration & Production ETF provides exposure to U.S. companies that are engaged in the exploration, production and distribution of oil and gas. It tracks the Dow Jones U.S. Select Oil Exploration & Production Index and holds 50 stocks in its basket. iShares U.S. Oil & Gas Exploration & Production ETF is concentrated on the top firm while other firms hold less than 9% share.
iShares U.S. Oil & Gas Exploration & Production ETF has AUM of $1 billion and trades in an average daily volume of 254,000 shares. The fund charges 39 bps in fees per year and has a Zacks ETF Rank #1 (Strong Buy) with a High-risk outlook (read: 5 Best-Performing Stocks of the Top ETF of August).

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iShares U.S. Oil & Gas Exploration & Production ETF (IEO): ETF Research Reports

Credit Suisse S&P MLP Index ETN (MLPO): ETF Research Reports

Sprott Uranium Miners ETF (URNM): ETF Research Reports

ETFMG U.S. Alternative Harvest ETF (MJUS): ETF Research Reports

AdvisorShares Psychedelics ETF (PSIL): ETF Research Reports

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