Investors have high expectations from 2021 after a pandemic-hit 2020. The rollout of the coronavirus vaccine, the introduction of the long-awaited new round of stimulus and the Fed’s continued support to keep interest rates low have added to investors’ hopes for a faster economic recovery in the United States. In addition, there are speculations of 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 investors’ portfolio for promising returns in 2021:
iShares Global Clean Energy ETF (ICLN – Free report)
Alternative energy includes any energy source that acts as a replacement for conventional and non-renewable fossil fuel. This space is making headlines these days for a number of reasons. Large companies are increasingly making or promising investments in order to achieve the most coveted CO2-neutral status. Green energy space has also been a hot topic in the US election campaign. In particular, favorable government initiatives and federal policies, including fiscal incentives to encourage installation, have accelerated the growth of the global clean energy market in 2020. in recent times.
The fund offers 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 Put These ETFs in Focus).
Strengthen online retail ETF (I BUY – Free report)
Online shopping is gaining popularity among shoppers in an effort to minimize human-to-human contact as coronavirus cases continue to increase in the United States. A report from Mastercard SpendingPulse emphasizes the same. In line with the digitization trend, online sales are up 49% from 2019. Online sales also accounted for about 19.7% of total retail sales, up from about 13.4% in 2019. The pandemic has been a particularly blessing for the e-commerce industry as people continue to prefer to stay in and shop online.
The fund provides investors with a cost-effective way to own a basket of companies with significant income from online or virtual retail. With an AUM of $ 1.45 billion, the fund has an expense ratio of 65 basis points (read: 5 sector ETFs to beat the market in 2020).
SPDR Portfolio Emerging Markets ETF (HOPE – Free report)
In addition to the development of the coronavirus vaccine and the introduction of a new round of stimulus, there are other factors that make a very strong case for emerging market ETFs. An impressive rally in this ETF area was seen as the dollar’s weakness against the currency basket attracted more capital to emerging markets. The greenback is expected to remain under pressure in the near term, given the trillions of cheap money pouring into the economy and the prospect of further easing. Furthermore, a Biden government is expected to remove uncertainty in international trade policy and ease trade tensions with China.
The fund aims to provide investment results that, before fees and expenses, generally correspond to the total returns of the S&P Emerging BMI Index. With an AUM of $ 5.06 billion, the fund has an expense ratio of 11 basis points (read: 5 emerging market ETFs beating S&P 500 amid virus scare).
Vanguard ESG US Stock ETF (ESGV – Free report)
The health crisis is also affecting the investment world, with market participants showing increased interest in conscious investing, boosting demand for environmental, social and governance (ESG) funds. Not only the coronavirus pandemic, but other factors, such as protests against racism, geopolitical tensions and changing climatic conditions, are responsible for the growing popularity of sustainable investment funds. Building on rising demand, ESG funds have seen a record inflow in the past year. ESG investments, in particular, have also shown some resilience and continue to attract investors’ attention during the pandemic.
The fund tracks the performance of the FTSE US All Cap Choice Index, which consists of large, mid and small cap stocks. It does not include companies active in adult entertainment, alcohol and tobacco, weapons, fossil fuels, gambling, and nuclear power. It also does not take into account companies that do not meet the UN Global Compact Principles and diversity criteria. With an AUM of $ 2.94 billion, the fund has an expense ratio of 12 basis points (read: ESG ETFs Are High in Pandemic: Will They Fail After a Crisis?).
Schwab US Small-Cap ETF (SCHA – Free report)
Small-cap stocks, as indicated by the Russell 2000 Index, are outperforming the broader market and reaching new all-time highs. This advantage is largely led by the small-cap companies that are closely tied to the US economy and thus well positioned to outperform when the economy improves. The latest developments, such as the rollout of the coronavirus vaccine and the introduction of a new round of fiscal stimulus measures, are expected to result in an improving economy.
The aim of the fund is to track as closely as possible the total performance of the Dow Jones US Small-Cap Total Stock Market Index, before fees and expenses. With an AUM of $ 12.99 billion, the fund has an expense ratio of 4 basis points (read: 5 Small-Cap ETFs Set to Explode on COVID-19 Vaccines).
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