2025 is drawing to a close, and investors have plenty to look back on. Active ETF performance and proliferation was once again an important theme, and as the category matures, its standout performers have diversified. Looking back on a YTD performance basis at the top five non-leveraged active ETFs, for example, investors can find a varied list, including a surprise appearance by psychedelics ETF PSIL.
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The AdvisorShares Psychedelics ETF (PSIL) charges a robust 100 basis point fee for its active approach to psychedelics. The strategy has delivered on that fee with eye-popping performance numbers. According to ETF Database data, PSIL has returned 72% YTD, providing a 3X return compared to its ETF Database Category average. That YTD performance also places the active ETF in the top five active ETFs YTD, when excluding leveraged and inverse funds.
How, then, has the strategy produced those returns? The fund takes a global view of the psychedelics industry. Per ETF Database data, its holdings largely focus on the United States with investments in Australia, Canada, and the U.K., as well.
Psychedelics in the Active ETF Wrapper
Specifically, it invests in publicly-listed firms deriving at least 50% of revenues or having at least 50% of assets invested in legal activities related to psychedelic medicines and derivatives. PSIL looks to micro-cap, small-cap, and midcap companies in making its investments, aiming for at least 25% of investments in the pharmaceuticals, biotech, and life sciences sectors. Intriguingly, despite cannabis having psychotropic impacts, the ETF excludes cannabis from its investments.
The fund’s strong performance, then, does not owe to positive news about the legality of cannabis in the United States this year. Rather, its exposure to some hot, rising biotech names has been a key driver. Its largest holding according to ETF Database, Atai Beckley N.V. (ATAI), has returned a scorching 197% YTD per YCharts data. Founded in 2018, the company merged into Atai Beckley just this year and continues to look to psychedelics as a source of treatments for psychiatric conditions.
Looking ahead, what role might the active ETF play for investor portfolios? With its high fee but strong return potential, combined with its foreign exposures, the strategy could make for a growth-focused satellite allocation to consider for the right investor. Overall, PSIL’s strong performance once again speaks to the potential offered by the active ETF wrapper.
Originally published on ETF Trends
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