4 Market-Beating Sector ETFs Of January

U.S. stocks have been performing strongly this month on a dovish Fed and strong labor market. The longest government shutdown that lasted for 35 days was unable to take the sheen away from Wall Street.

The gains came despite global issues like the still unresolved U.S.-China trade war, global growth concerns, geopolitical tensions, Brexit and slowdown in the world’s second-largest economy. Weak corporate earnings also added to the woes.

While the gains were broad-based, we have highlighted four sectors ETFs that have outperformed the market in January and could be better plays in the months ahead should the trends prevail.  

ETFMG Alternative Harvest ETF (MJ - Free Report) – Up 33.2%

After being beaten down in the fourth quarter of last year, the marijuana ETF regained momentum as investors are capitalizing on the huge potential of the global cannabis industry. The pot industry is emerging and poised for rapid growth given its widespread legality, FDA's first approval of a cannabis-derived drug and the resultant wave of deals. MJ is the first and only pure ETF targeting the cannabis/marijuana industry. The fund 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 37 securities in its basket and charges 75 bps in annual fees. The ETF has AUM of $826.2 million and trades in a good volume of around 869,000 shares.

SPDR S&P Oil & Gas Equipment & Services ETF (XESFree Report) – Up 20.2%

Oil price has gained this month on falling production, OPEC-led fresh crude output cuts and hopes of a trade deal between the United States and China. The U.S. sanctions on Venezuela's oil exports lately also supported the oil price. With AUM of $212.5 million, this fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of the companies engaged in the oil and gas equipment and services industry. It holds 40 securities in its basket and charges 35 bps in annual fees. The fund trades in a solid average daily volume of 1.6 million shares and has a Zacks ETF Rank #4 (Sell) with a High risk outlook.

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