The Exchange Traded Funds market has been a bright spot in the vast stock market. ETFs have continued to edge higher as investors sought exposure as stocks raced to record highs. A record year of Initial Public Offerings has also seen IPO focused ETF register solid gains as investors jostled for positions in newly listed companies.
Booming IPO ETFs
IPO focused ETFs provide investors with exposure to newly listed companies such as Airbnb and DoorDash which have gone on to raise billions of dollars. The billions raised by the companies add to an already record-breaking year for IPO listing. Since the start of the year more than $150 billion has been raised in IPOs.
The Renaissance IPO ETF (IPO) is the poster child of the IPO ETF marketplace holding the most liquid newly-listed companies. Some of the ETF’s biggest holdings include Zoom Crowd Strike. The ETF is up by more than 100% for the year affirming the strong demand for IPO ETFs.
The First Trust US Equity Opportunities ETF is another IPO ETF sending shockwaves. The ETF holds 100 of the largest and most liquid newly listed companies. The IPO ETF has rallied by more than 45% since the start of the year.
Cannabis ETF Rally
IPO ETFs are not the only ones taking the stock market by storm. Cannabis-focused ETFs have also been on a roll, thanks to growing optimism about further U.S legalization. Cannabis stocks have continued to edge higher in the aftermath of the U.S election.
The optimism that the incoming administration led by Joe Biden and Kamala Harris will hasten marijuana legalization has also continued to fuel sentiments on cannabis ETFs. In the just-concluded election, five states led by New Jersey, Arizona, South Dakota, Montana, and Mississippi broadened the potential market for cannabis sales across the U.S.
Legalization drive in the five states could result in a 20% increase in the potential U.S market for legal cannabis. As it stands 36 states have already legalized the medicinal use of cannabis with 15 states legalizing recreational use.
The loosening of regulations and increased legalization is the catalysts that should help power cannabis stocks higher. Similarly, investors should be able to capitalize on the market’s expansion through a number of ETFs.
ETFMG Alternative Harvest ETF MJ is the world’s largest cannabis ETF holding 33 securities in its basket. The ETFs has $993 million or assets under management. The ETF is up by more than 15% over the past month. Despite being a new entrant AdvisorShares Pure US Cannabis ETF MSOS, has accumulated $145.2 million in just four months. The cannabis-focused ETF is up by more than 10% for the month.
AdvisorShares Pure Cannabis ETF YOLO and The Cannabis ETF THCX are other cannabis ETFs for investors looking to gain exposure to the burgeoning U.S cannabis marketplace.
While Cannabis ETF is poised to finish on a high, it’s a different story for Dividend stock ETFs. With a number of companies cutting or trimming their dividend programs, the ETFs have underperformed significantly while global dividends have declined significantly. The situation could improve come 2021 with Principal Active Global Dividend Income ETF (CBOE: GDVD) expected to be a bright spot.