Cannabis, Clean Energy and Commodities: ETF Themes to Watch as 2021's First Quarter Comes to a Close

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As the U.S. exchange-traded fund industry nears $6 trillion in assets under management, one market maker says a few hot trades are dominating investors' attention.

"Clean energy is still really active. And what's interesting is the marijuana ETFs are active also, very active," Harry Whitton, head of ETF sales trading at Old Mission, told CNBC's "ETF Edge" this week. "Both of those ended the year very strong, and on any given day, when clean energy's up, marijuana's up."

Clean energy ETFs such as the Invesco Solar ETF (TAN) and the iShares Global Clean Energy ETF (ICLN) have cooled off this year, down 13% and 17%, respectively, after a banner 2020.

Cannabis ETFs have largely built on their 2020 gains, with the largest funds up between 48% and 78% so far this year.

The groups' day-to-day correlation is likely a side effect of a stock-picking resurgence, cannabis ETF manager Tim Seymour told CNBC in a Friday email.

He runs the Amplify Seymour Cannabis ETF (CNBS) and is the founder and chief investment officer of Seymour Asset Management.

"Clean energy (and related SPACs) and cannabis have traded with high correlation due to the heavy retail interest ... and momentum drivers overall around retail," Seymour wrote, adding that "a couple decent-sized hedge funds" have been investing around both trends.

Commodities have also found a place at the center of investors' attention, Old Mission's Whitton said.

"We're seeing broad-based commodities get a lot of inflows, symbols like PDBC, DBC, COMT," he said. "People are looking at the reopening trade ... and there's a big use of broad-based commodities, so, that's an area performing well."

Gold and high-yield investments, however, are falling out of style, Whitton said.

"We're seeing outflows in gold and high yield, emerging-market bonds, as interest rates rise," he said. "All three of those are seeing outflows on a pretty consistent basis."

Whitton's bottom line? Thematic ETFs are "still very, very hot" — and for now, it's likely to stay that way.


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