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The U.S. stock market was off to a strong start in 2024. The S&P 500 rose 0.3% while the Nasdaq Composite Index and Dow Jones declined 0.3% each in the initial two weeks of 2024. Overstretched valuations and uncertainty about the timing of Fed rate cuts have dampened investors’ optimism (read: Nasdaq Surges on Big Tech: ETFs in Focus).
Still, a few corners of the stock market are outperforming. United States Natural Gas Fund (UNG - Free Report) , Sprott Junior Uranium Miners ETF (URNJ - Free Report) , AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) and Grayscale Bitcoin Trust ETF (GBTC - Free Report) have gained in double digits in the first couple of weeks of the New Year.
The latest data on wholesale prices, which unexpectedly declined 0.1% in December, has moved the market sentiment up. Consumer prices data came in modestly hotter than expected, with prices up 0.3% from the last month and 3.4% from the year-ago month. This has dampened market expectations about an interest rate cut as soon as March. Though the job data report for December came in stronger than expected, it also casts doubt on the expectations of March rate cuts.
The disappointing manufacturing and service data also added to the chaos. The U.S. manufacturing sector slipped further into contraction during December, according to the latest PMI data from S&P Global, as output declined and the downturn in new orders gathered pace. Services activity also slowed in December.
Additionally, the latest Fed minutes show that the central bank wouldn’t cut rates as aggressively as expected for this year. This suggests an uncertain path toward interest rate cuts and reflects a growing sense that inflation is under control.
ETFs in Focus
We have profiled the abovementioned ETFs in detail below:
Natural Gas
Natural gas prices spiked on freezing weather conditions across large parts of North America, which have boosted the demand for heating. United States Natural Gas Fund jumped 34.5% in the initial two weeks of the year. It 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 $863.1 and trades in a volume of around 19 million shares per day. UNG has a 1.06% expense ratio.
Uranium
Uranium continued its 2023 bull run, with its price peaking to a 16-year high of more than $100 on supply shortfall warnings from Kazatomprom, the world’s largest producer of the radioactive material. Sprott Junior Uranium Miners ETF gained 19% in the same timeframe. It is the only pure-play ETF focused on small uranium miners selected for their potential for significant revenue and asset growth.
Sprott Junior Uranium Miners ETF follows the Nasdaq Sprott Junior Uranium Miners Index, which is designed to track the performance of mid-, small- and micro-cap companies in uranium-mining-related businesses. It holds 32 stocks in its basket and charges 80 bps in annual fees. Sprott Junior Uranium Miners ETF has accumulated $217.4 million in its asset base and trades in an average daily volume of 181,000 shares.
Cannabis
Marijuana stocks spiked following the report that the US Drug Enforcement Administration is reviewing the potential reclassification of cannabis from Schedule I to Schedule III. This development, initiated by a recommendation from the Department of Health and Human Services, could lead to substantial federal benefits for the U.S. cannabis industry if it goes through. While most of the cannabis ETFs have risen, AdvisorShares Pure US Cannabis ETF is the biggest winner, gaming nearly 17% (read: Cannabis ETFs Spike on Marijuana Classification Review).
MSOS is the first actively managed U.S.-listed ETF with dedicated cannabis exposure, focusing exclusively on U.S. companies, including MSOs. It holds 23 securities in its basket with a double-digit concentration on the top four firms. AdvisorShares Pure US Cannabis ETF has amassed $630.7 million in its asset base while trading in an average daily volume of $5 million shares. It charges 83 bps in annual fees.
Bitcoin
Bitcoin ETFs made a solid debut last week, witnessing extraordinary trading volume and marking a significant milestone in the financial industry. This underscores strong investor interest and the potential growth of cryptocurrency in mainstream investment platforms. Grayscale Bitcoin Trust, the world’s largest Bitcoin ETF, emerged as the biggest winner, gaining 11.4% (read: Bitcoin ETFs Make Historic Debut With $4.6B in Trading).
It enables investors to gain exposure to Bitcoin in the form of a security while avoiding the challenges of buying, storing and safekeeping bitcoin directly. Grayscale Bitcoin Trust charges 1.50% in annual fees from investors. It owns and passively holds actual Bitcoins through the Custodian, Coinbase Custody.
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4 ETF Zones Beating the Market to Start 2024
The U.S. stock market was off to a strong start in 2024. The S&P 500 rose 0.3% while the Nasdaq Composite Index and Dow Jones declined 0.3% each in the initial two weeks of 2024. Overstretched valuations and uncertainty about the timing of Fed rate cuts have dampened investors’ optimism (read: Nasdaq Surges on Big Tech: ETFs in Focus).
Still, a few corners of the stock market are outperforming. United States Natural Gas Fund (UNG - Free Report) , Sprott Junior Uranium Miners ETF (URNJ - Free Report) , AdvisorShares Pure US Cannabis ETF (MSOS - Free Report) and Grayscale Bitcoin Trust ETF (GBTC - Free Report) have gained in double digits in the first couple of weeks of the New Year.
The latest data on wholesale prices, which unexpectedly declined 0.1% in December, has moved the market sentiment up. Consumer prices data came in modestly hotter than expected, with prices up 0.3% from the last month and 3.4% from the year-ago month. This has dampened market expectations about an interest rate cut as soon as March. Though the job data report for December came in stronger than expected, it also casts doubt on the expectations of March rate cuts.
The disappointing manufacturing and service data also added to the chaos. The U.S. manufacturing sector slipped further into contraction during December, according to the latest PMI data from S&P Global, as output declined and the downturn in new orders gathered pace. Services activity also slowed in December.
Additionally, the latest Fed minutes show that the central bank wouldn’t cut rates as aggressively as expected for this year. This suggests an uncertain path toward interest rate cuts and reflects a growing sense that inflation is under control.
ETFs in Focus
We have profiled the abovementioned ETFs in detail below:
Natural Gas
Natural gas prices spiked on freezing weather conditions across large parts of North America, which have boosted the demand for heating. United States Natural Gas Fund jumped 34.5% in the initial two weeks of the year. It 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 $863.1 and trades in a volume of around 19 million shares per day. UNG has a 1.06% expense ratio.
Uranium
Uranium continued its 2023 bull run, with its price peaking to a 16-year high of more than $100 on supply shortfall warnings from Kazatomprom, the world’s largest producer of the radioactive material. Sprott Junior Uranium Miners ETF gained 19% in the same timeframe. It is the only pure-play ETF focused on small uranium miners selected for their potential for significant revenue and asset growth.
Sprott Junior Uranium Miners ETF follows the Nasdaq Sprott Junior Uranium Miners Index, which is designed to track the performance of mid-, small- and micro-cap companies in uranium-mining-related businesses. It holds 32 stocks in its basket and charges 80 bps in annual fees. Sprott Junior Uranium Miners ETF has accumulated $217.4 million in its asset base and trades in an average daily volume of 181,000 shares.
Cannabis
Marijuana stocks spiked following the report that the US Drug Enforcement Administration is reviewing the potential reclassification of cannabis from Schedule I to Schedule III. This development, initiated by a recommendation from the Department of Health and Human Services, could lead to substantial federal benefits for the U.S. cannabis industry if it goes through. While most of the cannabis ETFs have risen, AdvisorShares Pure US Cannabis ETF is the biggest winner, gaming nearly 17% (read: Cannabis ETFs Spike on Marijuana Classification Review).
MSOS is the first actively managed U.S.-listed ETF with dedicated cannabis exposure, focusing exclusively on U.S. companies, including MSOs. It holds 23 securities in its basket with a double-digit concentration on the top four firms. AdvisorShares Pure US Cannabis ETF has amassed $630.7 million in its asset base while trading in an average daily volume of $5 million shares. It charges 83 bps in annual fees.
Bitcoin
Bitcoin ETFs made a solid debut last week, witnessing extraordinary trading volume and marking a significant milestone in the financial industry. This underscores strong investor interest and the potential growth of cryptocurrency in mainstream investment platforms. Grayscale Bitcoin Trust, the world’s largest Bitcoin ETF, emerged as the biggest winner, gaining 11.4% (read: Bitcoin ETFs Make Historic Debut With $4.6B in Trading).
It enables investors to gain exposure to Bitcoin in the form of a security while avoiding the challenges of buying, storing and safekeeping bitcoin directly. Grayscale Bitcoin Trust charges 1.50% in annual fees from investors. It owns and passively holds actual Bitcoins through the Custodian, Coinbase Custody.