Marijuana Stock Play's Smoking Gains Lead This Year's Top ETFs

The stock market wrapped up January with big gains, so let’s take a look at which top ETFs are off to the best start this year.


Overall, energy funds and select emerging-market plays led the pack. But top honors go to ETFMG Alternative Harvest (MJ), which soared 35.6% year-to-date through Wednesday, according to Morningstar Direct. The $933.3 million fund, which tracks the Prime Alternative Harvest Index, is composed of cannabis-related stocks.

Top 10 holdings as of Feb. 1 included Cronos Group (CRON), Canopy Growth (CGC) and Tilray (TLRY). The fund used to be Tierra XP Latin America Real Estate, until it overhauled its strategy, switched its index and changed its name. Shares ran up in August to mid-September as cannabis stocks soared. Then, they tumbled as much as 49% from a Sept. 19 high to a Dec. 24 low.

MJ is the leading sector fund. Other top performers in the sector category include SPDR S&P Oil & Gas Equipment & Services (XES), up 22.5% year to date, and VanEck Vectors Oil Services (OIH), up 21.9%. Invesco Solar (TAN) and iShares US Oil Equipment & Services (IEZ) rose 21.2% each.

Among commodity plays, United States Oil (USO) and Invesco DB Oil (DBO) came in first and second with respective year-to-date gains of 18% and 17.6%. West Texas Intermediate crude oil prices have enjoyed a 20% rise this year and climbed past $55 a barrel on Friday.

In the foreign stock space, First Trust Brazil AlphaDEX (FBZ) led with an 18.8% return. The $9.2 billion fund has advanced since right-wing President Jair Bolsonaro was sworn in. Following closely behind were iShares MSCI Turkey (TUR) and Global X MSCI Argentina (ARGT), with gains of 17.9% and 17.7%, respectively.

Midcaps Among Top ETFs

“Attractive valuations, coupled with a backdrop of economic reforms and policy stimulus, support the case for (emerging market) stocks,” Richard Turnill, BlackRock’s Global Chief Investment Strategist, noted in a recent report. “We view financial contagion risks as low.”

A pair of midcap ETFs topped the U.S. diversified stock category: Invesco Russell MidCap Pure Growth (PXMG) (up 12.3%) and WisdomTree US MidCap Earnings (EZM). PXMG, with $307 million in assets, counted Square (SQ), Chipotle Mexican Grill (CMG) and Ulta Beauty (ULTA) among its top holdings as of Thursday.

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EZM, which tied Invesco S&P 500 High Beta (SPHB) with a 12.2% return, held Huntsman (HUN), PulteGroup (PHM) and Nektar Therapeutics (NKTR) among its top holdings. EZM has $1.1 billion in assets, while SPHB has $111.7 million.

“Solid corporate earnings and ongoing economic expansion underpin our positive view (on U.S. equities),” Turnill wrote. “We have a growing preference for quality companies with strong balance sheets as the 2019 macro and earnings outlooks become more uncertain.”


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