The global stock market was kind to investors in the third quarter despite the escalation in U.S.-China tariff trade, emerging market meltdown especially Turkey and Argentina, tech sell-off and geopolitical tension. The MSCI All Countries World Index rose more than 4% buoyed by encouraging performance of the American market, which is showing strong complacency and extending its longest bull run in history.
Notably, the S&P 500 recorded its best quarterly gain since the fourth quarter of 2013, rising 7.2% buoyed by dual tailwinds of corporate earnings and a booming economy. The Nasdaq Composite climbed 7.1% — its best since first-quarter 2017 — while the Dow Jones outperformed, climbing 9.3%.
Other asset classes like commodities or fixed income have seen mixed trading. This is because although the risk-off trade brought the precious metals and bonds in the limelight, increased confidence and improving economic growth dampened their demand. Meanwhile, Brent jumped to its highest level in nearly four years on the potential U.S. sanctions against Iran expected to kick-off in November.
That said, some corners of ETF investing have performed exceptionally well while some are lagging. Below, we have highlighted the best and worst zones of the third quarter and their ETFs in detail:
Best Zones
Pot Industry
The emerging pot stocks have been firing on all cylinders amid the backdrop of more legalization of the plant for recreational use, which has paved the way for a merger mania, spurring a large number of deal activities in the industry. As such, ETFMG Alternative Harvest ETF (MJ – Free Report), the first and only ETF targeting the cannabis/marijuana industry, surged 36.4% in the third quarter. It tracks the Prime Alternative Harvest Index, designed to measure the performance of companies within the cannabis ecosystem, benefiting from global medicinal and recreational cannabis legalization initiatives.
The fund holds 39 securities in its basket with higher concentration on the top four firms. Canadian firms make up 60.5% of the portfolio, while American firms comprise just 21%. The ETF has AUM of $657.3 million and trades in a good volume of around 451,000 shares. It charges 75 basis points (bps) in annual fees.
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