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Investors have high expectations from 2021 after a pandemic-stricken 2020.The deployment of the coronavirus vaccine, the introduction of the long-awaited new stimulus round and the Fed’s continued support to keep interest rates down lows added to investors’ hope for a faster economic recovery in the United States. Additionally, there is speculation about a bigger stimulus package after President-elect Joe Biden takes over the administration, the Guardian report said.
With the current scenario in mind, let’s discuss ETFs that can be good additions to investors’ portfolios for promising returns in 2021:
IShares Global Clean Energy ETF (ICLN – Free report)
Alternative energy includes any energy source that replaces conventional and non-renewable fossil fuels. This space is making headlines these days for several reasons. More and more, large companies are making or promising investments to achieve the most coveted carbon neutral status. Additionally, the green energy space has been a hot topic of discussion in the US election campaign. Notably, supportive government initiatives and federal policies, which include tax incentives to encourage installation, have accelerated the growth of the global clean energy market in 2020. Moreover, despite the turbulence resulting from the coronavirus pandemic, energies solar and wind have dominated the global renewable space in recent times.
The fund provides exposure to companies that generate 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).
Amplify Online Retail ETF (I BUY – Free report)
Online shopping is growing in popularity among shoppers in an attempt to minimize human-to-human contact as coronavirus cases continue to rise in the United States. A report from Mastercard SpendingPulse points out the same. In line with the trend of digitization, online sales grew 49% from 2019 levels. Online sales also accounted for around 19.7% of total retail sales, up from around 13.4% in 2019. Notably, the pandemic has been a boon to the e-commerce industry as people continue to prefer to stay indoors and shop online.
The fund provides investors with a profitable way to own a basket of companies whose significant income comes from online or virtual retail sales. With an AUM of $ 1.45 billion, the fund has an expense ratio of 65bp (read: 5 sector ETFs that beat the market in 2020).
SPDR Emerging Markets Portfolio ETF (HOPE – Free report)
Along with the development of a coronavirus vaccine and the introduction of another round of stimulus, other factors make a very good case for emerging market ETFs. An impressive rally in this area of ETFs was seen due to the weakness of the dollar versus the basket of currencies which 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. Additionally, a Biden administration is expected to reduce uncertainty in international trade policy and reduce trade tensions with China.
The fund aims to provide investment results which, before fees and expenses, generally match the total return performance of the S&P Emerging BMI Index. With an AUM of $ 5.06 billion, the fund has an 11bp expense ratio (read: 5 emerging market ETFs beating the S&P 500 amid fear of the virus).
Vanguard ESG U.S. Equity ETF (ESGV – Free report)
The health crisis has also had an impact on the investment world, with market players showing greater interest in conscious investing, stimulating demand for environmental, social and governance (ESG) funds. Not only the coronavirus pandemic, but other factors such as anti-racism protests, geopolitical tensions and changing weather conditions are responsible for the growing popularity of sustainable investment funds. Riding on growing demand, ESG funds are recording record inflows in the current year. Notably, ESG investing has also shown some resilience and continues to garner investor attention amid the pandemic.
The fund tracks the performance of the FTSE US All Cap Choice Index, made up of large, mid and small capitalization stocks. It does not include companies operating in the adult entertainment, alcohol and tobacco, weapons, fossil fuel, gambling, and nuclear power industries. It also does not take into account companies that do not respect the principles of the United Nations Global Compact and the criteria of diversity. With an AUM of $ 2.94 billion, the fund has an expense ratio of 12bp (read: ESG ETF Stand Tall Amid Pandemic: Will They Fail Post Crisis?).
Schwab US Small Cap ETF (SCHA – Free report)
Small-cap stocks, as the Russell 2000 Index indicates, have outperformed the broader market and are reaching new all-time highs. This rise is largely driven by small cap companies which are closely tied to the US economy and therefore are well positioned to outperform when the economy improves. The latest developments such as the rollout of the coronavirus vaccine and the introduction of another round of fiscal stimulus are expected to translate into an improvement in the economy.
The fund’s objective is to follow as closely as possible, before fees and expenses, the total return of the Dow Jones US Small-Cap Total Stock Market index. With an AUM of $ 12.99 billion, the fund has an expense ratio of 4bp (read: 5 small-cap ETFs ready to explode on COVID-19 vaccines).
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