These darling fellows crushed it in 2020 – and they’re just getting started

Past performance may not guarantee future results, but in a market driven by momentum, what worked recently often continues to work. Many of the most prominent trends in the stock market will affect companies not only for a single year, but for a long time as well.

One of these big trends has been the push towards electric vehicles and renewable energies. Many individual stocks riding this wave saw big gains in 2020. Even if you prefer the diverse exposure offered by sector-focused ETFs, you could have made a lot of money in 2020.

LIT data by YCharts.

the Invesco WilderHill Clean Energy ETF (NYSEMKT: PBW) and the Global X Lithium & Battery Tech ETF (NYSEMKT: LIT) were among the top ETFs of 2020. They are also moving forward in 2021, riding the wave of interest in electric vehicles, renewables and other clean tech initiatives.

A wilder way to buy electric vehicles

The Invesco Wilderhill Clean Energy ETF tripled in shareholder value in 2020. It also had a stronger start in 2021, growing 22% in just a week and a half.

The Invesco fund has an overall investment objective of finding companies in all areas of clean energy and conservation. In practice, this includes nearly four dozen companies in specific fields ranging from electric vehicles and charging infrastructure to solar power and lithium mining. About three-quarters of its shares are based in the United States. Top performing stocks include Chinese leader in EVs NIO (NYSE: NIO), solar supplier SolarEdge Technologies (NASDAQ: SEDG)and mining company Lithium Americas (NYSE: LAC).

With an expense ratio of 0.70%, the Invesco ETF isn’t that cheap. However, for those who don’t want the risk of holding a smaller number of individual stocks – or the hassle of buying dozens of stocks to fully match the portfolio – the fund does a good job of providing significant exposure. in the clean energy sector. .

Getting a charge on lithium and battery stocks

The Global X Lithium & Battery Tech ETF performed a bit weaker in 2020 than its counterpart here, but still more than doubled for the year. This ETF has a much narrower focus that focuses more on the extraction, refining and use of lithium in the production of rechargeable batteries for a wide range of applications.

It’s no surprise that a much larger proportion of the Global X ETF’s portfolio is in non-US companies. This is because lithium is found in strategic places around the world. Businesses are growing where there is lithium to mine.

Global X performed well from its leader title, Albemarle (NYSE: ALB), which is a lithium supplier. Shares more than doubled in 2020 as demand for lithium skyrocketed.

Yet the ETF, which has an expense ratio of 0.75%, has also undoubtedly received a huge boost thanks to its leading positions in the electric vehicle. You’re here (NASDAQ: TSLA). With its dual role as both a consumer of battery supplies and a producer of high-end battery technology, Tesla’s comeback alone has made a major contribution despite the stock currently being only 5.5%. . It also contributes to the performance of the ETF in 2021, as the fund is already up almost 15%.

LIT data by YCharts.

Expect more from battery tech stocks in 2021

Manufacturers of electric vehicles are just beginning their efforts. Many successful companies have not even started manufacturing vehicles yet. Even those who are ahead of the game have a long way to go before they hit their stride.

This suggests that key component suppliers will be successful in the future. 2021 will likely see even more success for these two ETFs and the companies in their portfolios.