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Wall Street ended the fourth quarter on a solid note despite the turbulence in the final month. The Nasdaq Composite and the S&P 500 rose for the fifth consecutive quarter for the first time since 2021, gaining 6.2% and 2.1%, respectively. The Dow Jones was up a mere 0.5% in the quarter.

We have highlighted five top-performing ETFs from different sectors that were the leaders in the fourth quarter. These are AdvisorShares Psychedelics ETF, First Trust SkyBridge Crypto Industry & Digital Economy ETF, Themes Generative Artificial Intelligence ETF, ProShares Big Data Refiners ETF and U.S. Global Jets ETF.

Notably, the S&P 500 touched 6,100 for the first time in early December, and the tech-heavy Nasdaq topped the 20,000 milestone. The Dow Jones also crossed the 45,000 milestone for the first time in early December but then dropped sharply. In fact, the blue-chip index logged its worst losing streak in nearly 50 years after peaking and lost 5.3% in December alone.  

Although the revival of tensions between Russia and Ukraine, as well as uncertainty about future rate cuts, dented the risk appetite, Fed rate cuts, optimism surrounding corporate growth under President-elect Donald Trump, and a resurgence in tech stocks drove stocks higher.

The market is betting that the second Trump administration will provide a boost to stocks, given his more market-friendly policies. While Trump's policies on restricting illegal immigration, enacting new tariffs, lowering taxes and reducing regulations may boost the economy, they may accelerate inflation, limiting the Federal Reserve's ability to cut rates. The Fed envisions only two rate cuts in 2025, in contrast to four projected in September, given a solid labor market and sticky inflation.

Lower interest rates generally lead to reduced borrowing costs, helping businesses expand their operations more easily and thus driving profitability. This, in turn, stimulates economic growth and provides a boost to the stock market.

Let’s dig into the details of the abovementioned ETFs:

AdvisorShares Psychedelics ETF (PSIL - Free Report) – Up 49.1%

AdvisorShares Psychedelics ETF invests in the emerging psychedelic drugs sector, offering exposure to biotechnology, pharmaceutical and life sciences companies that it sees as leading the way in this nascent industry. It is an actively managed fund and holds 27 stocks in its basket with a double-digit concentration on the top two firms. AdvisorShares Psychedelics ETF has accumulated $6.1 million in its asset base and charges 99 bps in annual fees. It trades in an average daily volume of 13,000 shares. 

First Trust SkyBridge Crypto Industry & Digital Economy ETF (CRPT - Free Report) – Up 44%

First Trust SkyBridge Crypto Industry and Digital Economy ETF is designed to provide exposure to companies that SkyBridge believes are driving cryptocurrency, crypto assets and digital economy-related innovation. SkyBridge identifies securities primarily via “bottom-up” research focused on finding companies leading in the crypto industry ecosystem. 

First Trust SkyBridge Crypto Industry & Digital Economy ETF holds 31 stocks in its basket and charges 85 bps in fees per year from investors. It has amassed $91.5 million in its asset base and trades in an average daily volume of 99,000 shares.

Themes Generative Artificial Intelligence ETF (WISE - Free Report) – Up 30.7%

Themes Generative Artificial Intelligence ETF seeks to track the Solactive Generative Artificial Intelligence Index, which identifies companies that derive their revenues from AI, Data Analytics & Big Data, Natural Language Processing, or Artificial Intelligence-Driven Services. It holds 40 stocks in its basket, with a heavy concentration on the top firm at 11.3%. Other firms hold no more than 6.5% share.

Themes Generative Artificial Intelligence ETF has amassed $21.4 million in its asset base and charges 35 bps in annual fees. It trades in average daily volume of 9,000 shares. 

ProShares Big Data Refiners ETF (DAT - Free Report) – Up 26.6%

ProShares Big Data Refiners ETF invests in companies that help businesses process massive amounts of data to draw competitive insights. It tracks the FactSet Big Data Refiners Index and holds 29 stocks in its basket. ProShares Big Data Refiners ETF has amassed $6.6 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 6,000 shares and has a Zacks ETF Rank #2 (Buy).

U.S. Global Jets ETF (JETS - Free Report) – Up 23.9%

U.S. Global Jets ETF provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. The product holds 58 securities and charges 60 bps on an annual basis. U.S. Global Jets ETF has gathered $1.1 billion in its asset base while seeing a heavy trading volume of nearly 2 million shares a day. JETS has a Zacks ETF Rank #3 (Hold).

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