In the very beginning of July, ACT was down about 9%. Year-to-date through Oct. 1, it’s up by nearly 4%, enough to bump it up from eighth place in the InvestorPlace.com Best ETFs Contest to seventh.
Again, not a winning pick, but not a losing pick, either.
Wrapping up the month of July, the fund gained 8.65% on its net asset value (NAV) and 8.69% on its market price. In its most recent portfolio manager review, Dan Ahrens commented that May through July 2020, the Fund “returned 14.07 % on its net asset value (NAV) and 13.77% on its market price, while the S&P 500 returned 12.87%.”
ACT’s Top Holdings Led by Alcohol and Health Sectors
The ACT ETF’s current top five holding are Boston Beer (NYSE:SAM), Thermo Fisher Scientific (NYSE:TMO), Abbott Laboratories (NYSE:ABT), PerkinElmer (NYSE:PKI) and LVMH Moet Hennessy Louis Vuitton ADR (OTCMKTS:LVMUY).
Top holding Boston Beer continues to go on a tear this year. It’s safe to say founder Jim Koch is having a better 2020 than most of us. Thanks to the success of the company’s Truly Hard Seltzer brand, Koch just made his debut on the Forbes 400 list.
The company’s earnings per share (EPS) is expected to grow 28.7% this year, way above the industry average, which calls for EPS growth of -3.7%. The ACT ETF upped its weight in SAM stock from 7.35% in July, to 10.54% today.
Citing his confidence about the company’s upcoming launch of Truly Iced Tea Hard Seltzer, due out in January, Guggenheim analyst Laurent Grandet holds a “buy” rating on the stock, taking his price target up to $1,142 from $977.
The second top holding in the ACT ETF portfolio, Thermo Fisher Scientific, has become a bit of a novel coronavirus play. Thermo Fisher is one of the diagnostic makers that received Food and Drug Administration emergency use authorization to test for the new virus in March. In its second quarter, TMO generated $1.3 billion of Covid-19 related revenues. During its analyst meeting on Sept. 10, the company forecast that the pandemic will generate revenue of about $3 billion over the back half of the year for a total of more than $4 billion in 2020.
The ACT ETF portfolio’s weight in TMO went up to 8.27% from 7.79% in July. Thermo Fisher Scientific is currently up 36% year-to-date.
Not Just Cannabis
Cautious investors might be weary of getting involved with an ETF that has 40% of its portfolio in cannabis-related revenue, especially given shares in cannabis stocks have slumped this year. Investors need to remember that this is a broader vice ETF. Take comfort in the fact that ACT also has significant exposure to the alcohol, gambling and tobacco sectors that provide a buffer against the often volatile cannabis space. After all, its top holding Boston Beer, up 132% year-to-date, is carrying it above water.
As for its cannabis holdings, they will rise again. According to the U.S. News & World Report, volume in cannabis stocks typically wanes during the summer. Interest in cannabis stocks should increase before the end of the year, especially given that a handful of states, including New Jersey, will vote in November on whether-or-not the use of recreational marijuana should be made legal.
ACT’s Final Ranking in the Best ETFs Contest
There were no surprises in terms of the ACT ETF’s standing in the Best ETFs for 2020 contest. It’s OK to be average in seventh place.
If you are interested in this long-term bet, know that it has a net expense ratio of 0.99%, or $99 annually per $10,000 invested. All in all, the ACT ETF has long-term durability with concentrated exposure to select companies related to alcohol, cannabis and tobacco.
On the date of publication, the InvestorPlace Staff did not have (either directly or indirectly) any positions in the securities mentioned in this article.