Best and Worst Performing ETFs of August 2023

Marijuana ETFs, among the past few years’ worst investments, surged in August thanks to favorable regulatory developments, while formerly high-flying crypto funds performed the worst. 

The best-performing exchange-traded fund was the AdvisorShares Pure US Cannabis ETF (MSOS), which had a total August return of 22%, while the worst-performing ETF was the Global X Blockchain ETF (BKCH), which lost 28%, according to etf.com data. ETF performance was based on 1-month trailing total return as of August 31, 2023. Inverse ETFs, leveraged ETFs and funds with fewer than $50 million in assets under management were excluded from the lists. 

Cannabis funds jumped, in a reversal of July’s performance, due to potential changes in U.S. federal marijuana regulations boosting those ETFs. Bitcoin prices fell by more than 11% in August, pushing down the value of crypto ETFs such as BKCH.  

Uranium ETFs jumped in August due to the coup in Niger, a major uranium supplier. Interest rates were also a theme as higher rates hurt clean energy ETFs and may have helped interest-rate-hedging ETFs. 

Best Performing ETFs of August 2023

Worst Performing ETFs of August 2023

Marijuana Stocks Turn Around 

In addition to MSOSs, multiple marijuana ETFs landed among August's top 10 performers. On the federal level—no matter how many states have legalized it—marijuana remains a Schedule 1 drug, putting in the same regulatory class as heroin. This makes things difficult for cannabis vendors, which often have to deal in cash to avoid running afoul of U.S. banking laws. But on Aug. 29, the U.S. Department of Health and Human Services requested that marijuana be reclassified as a Schedule III drug, which would significantly lower regulatory burdens for the industry. 

Bitcoin Losses Lead To Crypto Troubles

After Bitwise Crypto Industry Innovators ETF (BITQ) clocked in with July’s highest performance, rising 14.5%, it reversed course with the second-worst return in August. Bitcoin prices plummeted from roughly $29,700 to just below $26,000 last month. 

To be certain, the crypto industry had cause to celebrate as Grayscale won its lawsuit against the U.S. Securities and Exchange Commission to convert its fund to a spot bitcoin ETF. However, investors still moved away from riskier assets in August. Rumors that Elon Musk’s firm Space X had sold its crypto holdings also spooked investors. 

Interest Rate Woes For Solar Stocks

The decline in solar stocks hurt clean energy ETFs including the Global X CleanTech ETF (CTEC). Higher interest rates have made rooftop solar more expensive for consumers to install, while the price of a rival energy source, natural gas, has dropped significantly this year according to Yahoo Finance. High rates have also aided the Simplify Interest Rate Hedge ETF (PFIX), which hedges against interest rate changes. 

Contact Gabe Alpert at [email protected]