5 Sector ETFs That Outperformed In A Volatile January

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The stock market has seen a shaky start to 2021 as the U.S. stock had the worst start in five years and then hit new highs on optimism over the COVID-19 vaccine rollout and more stimulus from Washington. The surge in coronavirus cases and a slew of weak economic data continued to take a toll on investors’ sentiment.

In particular, the major U.S. indices retreated in the final week of 2021 on the back of heightened volatility triggered by retail trading frenzy in some of the stocks like GameStop Corp. (GME - Free Report) and AMC Entertainment Holdings (AMC - Free Report). As such, the three indices logged in their worst week since October, dropping more than 3% each, sending the Dow Jones and S&P 500 into the red for the first month of 2021.

Meanwhile, the tech-heavy Nasdaq Composite Index recorded a gain of 1.4% for the month buoyed by extended and stricter lockdowns that continued to drive demand for e-commerce in everything.

Against such a backdrop, we have highlighted five sector ETFs that outperformed in January and are likely to continue doing so should the same trends prevail.

Global X Cannabis ETF (POTX - Free Report) – Up 46.5%

Pot stocks rallied on the Democratic victories in Georgia’s two runoff elections that spurred hopes for near-term decriminalization and the growing adoption of marijuana in more states. A slew of financing deals and strong earnings reports have more further fuel to the surging pot stocks.

POTX seeks to invest in companies across the cannabis industry and tracks the Cannabis Index. It holds 18 stocks in its basket, with Canadian firms accounting for 75.3% of assets while the United States and Britain take 12.2% and 7.7% share, respectively. The product has accumulated $88.2 million in its asset base and trades in an average daily volume of 266,000 shares. Expense ratio comes in at 0.50%.

SPDR S&P Retail ETF (XRT - Free Report) – Up 36.8%

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