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Best-Performing ETFs of January

Sanghamitra Saha

January is traditionally a decent month for stocks. According to moneychimp.com, a consensus carried out from 1950 to 2018 has revealed that January ended up offering positive returns in 41 years and negative returns in 28 years with the average return being a negative 0.87%. The average return is moderate when compared to some other sturdy months of the year.

This January is no exception. In fact, it has been especially upbeat with the Fed adopting a dovish tone about the future rate hikes and the U.S.-China trade tension abating for a while. Moreover, a brutal December made the stocks cheaper and goaded investors to bet on the market with renewed vigor. The longest U.S. government shutdown hardly had an impact on Wall Street in January (read: U.S. Government Reopens: Tap High Beta & Momentum ETFs).

Overall, Dow Jones ETF SPDR Dow Jones Industrial Average ETF DIA and the S&P 500-based ETF SPY added about 6.7% and 6.5%, respectively in the past month while the tech-heavy Nasdaq-100 ETF QQQ advanced about 6.6%.

Against this backdrop, we highlight below the winning ETFs of January.

Gainers

ETFMG Alternative Harvest ETF MJ – Up 34.4%

After being beaten down in the final quarter of 2018, pot stocks recovered at the start of this year on positive industry-specific news and renewed risk appetite. First, the stock of pot-producer Tilray jumped in mid-January after a private-equity firm, which is the company’s controlling stockholder, affirmed that it won’t sell shares when Tilray’s IPO lockup expires on Jan 15. Also, several research houses have shown positive response to pot stocks of late (read: Why Marijuana ETF is on a High in 2019).

Also, there was news that Canadian marijuana producer Aurora Cannabis is acquiring British Columbia-based Whistler Medical Marijuana for about $132 million. Canopy Growth was also given New York State hemp license. And last but not the least, Chief Executive of Organigram Holdings Inc. recently indicated that recreational pot sales are likely to double in the first full quarter of legal marijuana sales in Canada.

SPDR S&P Oil & Gas Equipment & Services ETF (XES) – Up 20.6%

Oil prices have been rising on a fresh output cut deal from OPEC that will last for the first six months of 2019. United States Oil (USO) is up 14.9% in the past month. Hopes over the trade deal between the United States and China also added to the strength. Moreover, talks of U.S. sanctions against Venezuela also added to the supply concerns. As a result, the fund, which measures the performance of the companies engaged in the oil and gas equipment and services industry, gained materially (read: Best & Worst Performing ETFs to Start 2019).

Salt High truBeta US Market ETF SLT – Up 15.5%

The underlying Salt High truBeta US Market Index uses an objective, rules-based methodology to measure the performance of an equal-weighted portfolio of approximately 100 large and mid-capitalization U.S. listed stocks with the highest forecasted systematic risk relative to the market. As the broader market has been charged up this month, this high-beta ETF has all reasons to perk up.

ProShares Online Retail ETF ONLN – Up 15.3%

This holiday season has emerged as the best in six years with an e-commerce bonanza and surge in last-minute shopping. Notably, e-commerce sales rose 18.3% year over year between Nov 1 and Dec 19 boosted by 16.5% growth in apparel sales. Online sales at department stores, electronics and jewelry were also robust, rising between 7-10%. This explains the solid online sales momentum (read: Is Macy's Spooking You? 3 Retail ETFs & Stocks for 2019).

SPDR S&P Biotech ETF XBI – Up 14.2%

Biotechnology stocks are off to their best-ever start to the year. Bristol-Myers Squibb Co. started the year with the acquisition news of Celgene Corp. Analysts have predicted an uptick in mergers and acquisitions of both drugmakers and medical device companies in 2019. Some novel drug approvals have also contributed to the sector’s rally of late (read: What's Behind the Biotech ETF Rally to Start 2019?).

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