Best and Worst Performing Active ETFs in 3Q

Best and Worst Performing Active ETFs in 3Q

Marijuana funds led the pack and crypto funds lagged.

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Reviewed by: etf.com Staff
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Edited by: Mark Nacinovich

Marijuana funds, bolstered by the prospect of regulatory changes, topped the list of best-performing actively managed exchange-traded funds, while crypto funds plunged on sagging bitcoin prices. 

The best-performing active ETF in the third quarter was the Roundhill Cannabis ETF (WEED), which returned 52%, while the worst-performing active fund was the Valkyrie Bitcoin Miners ETF (WGMI), which lost 29%. Inverse and leveraged funds were excluded from the lists, and the numbers in the article are as of Sept. 29. 

In addition to WEED, the AdvisorShares Pure US Cannabis ETF (MSOS) also made it into the top three best-performing active ETFs as that whole industry has soared since the news that the U.S. Department of Health and Human Services suggested that the Drug Enforcement Administration change marijuana from a Schedule I drug to the less heavily restricted Schedule III.

Rising interest rates boosted the other best performer, the Simplify Interest Rate Hedge ETF (PFIX), while falling bitcoin prices and a flight to safer assets hit crypto stock ETFs and the gene-editing stock fund which filled out the worst performers. 

Best Performing Active ETFs

Ticker   Name3-Month Total ReturnAssets Under Management ($M)Expense Ratio
WEEDRoundhill Cannabis ETF52%3.50.39%
PFIXSimplify Interest Rate Hedge ETF51%2340.50
MSOSAdvisorShares Pure US Cannabis ETF44%5910.80%


Worst Performing ETFs

Ticker   Name3-Month Total ReturnAssets Under Management ($M)Expense Ratio
WGMI Valkyrie Bitcoin Miners ETF-29%140.75%
CRPTFirst Trust SkyBridge Crypto Industry and Digital Economy ETF-18160.85%
ARKGARK Genomic Revolution ETF-17%17600.75%


Marijuana Reforms Possible

The HHS memo doesn’t change any regulations by itself, as the decision is ultimately up to the DEA, which has refused to reclassify marijuana in the past, most recently in 2016. The new request may indicate that the HHS believes the DEA may have changed its mind as marijuana legalization has grown more common on a state level since the DEA’s last rejection.  

Rescheduling it would substantially lower taxes on marijuana businesses, as the law now prohibits cannabis businesses from making business-expense deductions or accessing tax credits available to other businesses, according to consulting firm Crowe. 

Another boon to cannabis stocks has been progress made by the SAFER Banking Act, which passed a committee vote in the Senate late last month. The act would make it much easier for marijuana companies to access banking services, as currently many are forced to deal entirely in cash. The bill must still pass the broader Senate and the Republican-controlled House of Representatives. 

Rates Up, Bitcoin Down 

Long-term interest rates, as measured by the yield on the 30-year Treasury, rose 23% in the third quarter, boosting the performance of PFIX, which hedges against interest rate increases. This rise in rates has pushed investors away from highly speculative, growth-oriented assets such as bitcoin-related stocks held by WGMI and gene-editing companies, held by the ARK Genomic Revolution ETF (ARKG). 

“ARKG, like the rest of the ARK suite of ETFs, is focused on growth over profits. The growth tilt worked earlier this year, but as interest rates have surged, investors have shied away from unprofitable growth stocks,” said Sumit Roy, senior analyst at etf.com. 

Bitcoin prices also fell in mid-August after the Wall Street Journal broke the news that SpaceX had written down the value of its bitcoin holdings by $373 million, putting further pressure on bitcoin mining stocks. 

Contact Gabe Alpert at [email protected]       

Gabe Alpert is a former data reporter at etf.com with over seven years’ experience in financial journalism. He also previously contributed reporting and analysis to Barron’s Magazine, Investopedia and other publications.