Investors have high expectations from 2021 to a pandemic-stricken 2020. The launch of the coronavirus vaccine, the launch of the long-awaited new stimulus round and the Fed’s continued support to keep interest rates low have kept investors ‘hopes of’ a faster economic recovery in the United States. In addition, there is speculation about a larger stimulus package after President-elect Joe Biden takes over the administration, according to the Guardian article.
With the current scenario in mind, let’s discuss ETFs that could be a good addition to the investor’s portfolio for promising returns in 2021:
iShares Global Clean Energy ETF (ICLN – Free report)
Alternative energy includes any energy source that is replaced as conventional and non-renewable fossil fuels. This space has made headlines these days for several reasons. Large companies are increasingly doing or promising to achieve the most coveted carbon neutral status. The green energy space was also a hot topic of discussion in the US election campaign. Favorable government initiatives and federal policies, which include tax incentives to encourage installation, accelerated global energy market growth in 2020. In addition, despite the turmoil resulting from the coronavirus pandemic, both solar and wind energy have dominated the world’s renewable space in recent times.
The fund provides exposure to companies that produce energy from solar, wind and other renewable sources. With an AUM of $ 4.55 billion, the fund has an expense ratio of 46 basis points (bps) (read: S&P Global Talks to Buy IHS Markit puts these ETFs in focus).
Amplify Online Retail ETF (I BUY – Free report)
Online shopping is gaining favor among shoppers in an effort to reduce human-to-human contact as coronavirus cases continue to increase in the United States. A report from Mastercard SpendingPulse emphasizes the same. To keep up with the digitalisation trend, online sales increased by 49% from 2019. Online sales also accounted for about 19.7% of total retail sales, compared to about 13.4% in 2019. The pandemic was a particular blessing for the e trading industry because people still prefer to stay indoors and shop online.
The fund provides a cost-effective way for investors to own a basket of companies with significant revenue from online or virtual retail sales. With an AUM of $ 1.45 billion, the fund has a cost ratio of 65 bps (read: 5 sector ETFs defeating the market in 2020).
SPDR Portfolio Emerging Markets ETF (SPEM – Free report)
Along with the development of coronavirus vaccines and the launch of another round of stimuli, there are other factors that are a very strong argument for ETFs of the emerging markets. An impressive march in this ETF area was observed due to the weak dollar against the basket of currencies that raised more capital in the emerging markets. The greenback is expected to remain under pressure in the short term, given the billions of cheap money flowing into the economy and the prospect of further easing. Going forward, a Biden government is expected to cut uncertainty in international trade policy and reduce trade tensions with China.
The fund seeks to deliver investment results that, before fees and expenses, are generally consistent with the overall return performance of the S&P Emerging BMI Index. With an AUM of $ 5.06 billion, the fund has an expense ratio of 11 bps (read: 5 Emerging Market ETFs Seating P&P 500 Amid Virus Scare).
Vanguard ESG US Equity ETF (ESGV – Free report)
The health crisis has also had an impact on the investment world, with market participants showing greater interest in conscious investment, which has fueled the demand for environmental, social and management funds (ESG). Not only the coronavirus pandemic but also other factors like protests against racism, geopolitical tensions and changing climatic conditions are responsible for the growing popularity of sustainable investment funds. ESG funds, based on rising demand, are seeing record flows in the current year. Strikingly, ESG investments have also shown some resilience and are still attracting investors amid the pandemic.
The fund keeps track of the performance of the FTSE US All Cap Choice Index which includes large, medium and small cap stocks. This does not include companies that include adult entertainment, alcohol and tobacco, weapons, fossil fuels, gambling and nuclear power industries. Companies that do not meet the UN’s global compact principles and diversity criteria are also not taken into account. With an AUM of $ 2.94 billion, the fund has a 12 bps expense ratio (read: ESG ETFs stand high amid pandemic: will they not fail after a crisis?).
Schwab US Small-Cap ETF (SCHA – Free report)
Small-cap stocks, as indicated by the Russell 2000 index, outperformed the broader market, reaching new highs of all time. This upside is mainly driven by small-cap companies that are closely tied to the US economy and therefore well positioned to perform better as the economy improves. The latest developments such as the introduction of the coronavirus vaccine and the introduction of another round of fiscal stimulus are expected to result in an improving economy.
The purpose of the fund is to track the total returns of the Dow Jones U.S. small-cap stock market as closely as possible. With an AUM of $ 12.99 billion, the fund has a spending ratio of 4 bps (read: 5 Small-Cap ETFs that will explode on COVID-19 vaccinations).
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