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The Psychedelic Sector is Quietly Outperforming the S&P 500

Sep 7, 2022 • 7:24 AM EDT
2 MIN READ  •  By Michael berger
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During the last two months, the psychedelic sector has been outperforming the market and we believe the trend is going unnoticed by Wall Street.

To better explain the trend we have highlighted 3 exchange traded funds (ETFs) that are comprised of publicly traded psychedelic companies.

Two Psychedelic ETFs to be Aware of

AdvisorShares Psychedelics ETF (NYSE: PSIL) is a non-diversified actively managed ETF that has at least 80% of its net assets (plus any borrowings for investment purposes) in securities of companies that derive at least 50% of their net revenue from or devote 50% of their assets to psychedelic drugs. The fund primarily invests in publicly listed life sciences companies which are focused on psychedelic medicines as well as operators which are levered to some part of the psychedelic sector.

So far this year, the AdvisorShares Psychedelics ETF has fallen approx. 30% (as of September 6th). Although we were concerned with the trend in the middle of the year, the ETF has rallied almost 50% since June 16th and we are favorable on how the stock has bounced back.

Another non-diversified ETF we follow is Defiance Next Gen Altered Experience ETF (NYSE: PSY) which owns a good number of Canadian cannabis companies. The fund claims to be a rules-based index that tracks the performance of a portfolio of companies in the following sectors: medical psychedelics, medical cannabis, cannabis pharmaceuticals and cannabidiol derivatives, and ketamine.

So far this year, the Defiance Next Gen Altered Experience ETF has fallen more than 50% (as of September 6th). Although we are more favorable on the AdvisorShares Psychedelics ETF, we are monitoring Defiance’s ETF since it has rallied approx. 20% off its mid-June lows.

A Psychedelic ETF Debuts on the NYSE

Earlier this year, PSYK ETF (NYSE: PSYK) commenced trading on the NYSE and the fund is down less than 5% since then. The fund is a non-diversified ETF which uses a passive management (or indexing) approach to track the performance of the index. The index is a rules-based index that tracks the performance of a portfolio of companies that have business activity in the fields of psychedelic treatment used to address medical conditions.

The PSYK ETF has rallied approx. 20% off its mid-May lows and we will continue to monitor the fund. We also prefer the AdvisorShares Psychedelics ETF to PSYK but believe both funds are worth watching.

If you are interested in learning about psychedelic ETFs, please send an email to support@mushroomstocks.com with the subject “ Psychedelic ETFs” to be added to our distribution list.

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Michael berger

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