Psychedelic ETF PSIL Is 2025's Best-Performing ETF
The ETF, which invests in emerging psychedelic drugs, has soared 40% this year.
Five weeks into 2025, a relatively obscure fund sits atop the ETF leaderboard.
The AdvisorShares Psychedelics ETF (PSIL) is the year’s best-performing exchange-traded fund so far among non-leveraged ETFs. PSIL is a small ETF with only $10 million in assets under management, but it sports a hefty gain: up 40% year to date.
PSIL invests in the emerging psychedelic drugs industry, “offering exposure to those biotechnology, pharmaceutical and life sciences companies [that are] leading the way in this nascent industry.”
The actively managed ETF currently holds around 25 stocks and seeks to capitalize on the increasing use of psychedelics to treat mental health issues.
MDMA, PTSD and Clinical Trials
A week ago, "60 Minutes" ran a segment highlighting the benefits of psychedelic therapy for veterans suffering from post-traumatic stress disorder.
In addition to PTSD, research and clinical trials are being conducted to see whether these therapies can help treat depression, anxiety, substance abuse and eating disorders.
While illegal at the federal level in the U.S., in 2017, the Food and Drug Administration granted “Breakthrough Therapy Designation to MDMA for the treatment of posttraumatic stress disorder (PTSD).”
It did the same for a psilocybin therapy to treat depression in 2018 and then approved a ketamine nasal spray medication for the treatment of depression in 2019.
PSIL Performance
Despite the potential of psychedelic therapies, there doesn’t seem to be a lot of interest in the space among investors, judging from PSIL's small size.
This year’s big bounce aside, the poor performance of the ETF since its debut in 2021 is likely to blame. The fund has fallen more than 80% since its debut as the companies it invests in struggle to develop commercially viable drugs.
In August, the FDA rejected a drug application from Lykos Therapeutics for an MDMA-assisted therapy for PTSD.
Drug companies have struggled to design clinical trials for these therapies that satisfy the regulator. Given their mind-altering effects, patients can often tell whether they are given the drugs, making it difficult to separate the drug's actual therapeutic effects from the psychological expectations of the participants, complicating the FDA's evaluation of their true efficacy.
Nevertheless, hopes remain high that the industry can eventually succeed. Whether investors in psychedelic stocks and ETFs benefit from that eventual success remains to be seen.
