It’s time for Thanksgiving and Americans are ready to stuff their plates with food and carts with shopping, especially online, due to the coronavirus pandemic. The celebration of bounty and gratitude is in full swing in the investment world as well.
Let’s explore it by screening ETFs that have rewarded investors this year. How is the Stock Market Faring?
After being badly hit by the pandemic in March, Wall Street has staged an astounding comeback on COVID-19 vaccine optimism and continued support from the Federal Reserve. The rally strengthened this month driven by the spate of encouraging data on the progress of vaccine as well as the potential for a divided government though the spike in new cases is weighing on investors’ sentiment (read:
ETFs to Bet on Biden's Potential Presidential Victory). This is especially true as vaccine development is being viewed as “a beginning to the end” of the coronavirus pandemic, and the prospect of a divided congress is considered favorable for the economy with lower chances of major tax increases and tighter regulations. Additionally, improving prospects for a smooth White House transition led to the strength. While all the three major indices hit new highs in the latest session, the Dow Jones Industrial Average topped the 30,000 milestone for the first time ever. Last week, the index made the fastest bear market recovery in 30 years as it took 1,483 trading days to carve out a new all-time high after hitting a bear market, per Dow Jones Market Data. The Dow Jones is up about 60% since its Mar 23 bear market (read: Dow ETF Hits New Highs on Vaccine Optimism: 5 Best Stocks). That said, a few corners are easily crushing the broader market in the year-to-date period. Below we have highlighted five ETFs from different zones that have been star performers so far this year and could be better plays in the coming months. These ETFs deserve special thanks and attention going into the New Year too (see: all the Categories ETF here). Invesco WilderHill Clean Energy ETF ( PBW Quick Quote PBW - Free Report) – Up 171% The clean energy space has been soaring this year on president-elect Joe Biden’s proposal to build a green and clean infrastructure. Biden plans to pump $2 trillion into green energy over four years to build solar panels, charging stations and more; vows to rejoin the Paris climate in “exactly 77 days;” and aims for net-zero emissions by 2050. While all the clean energy ETFs are rising, PBW is the biggest winner. This fund provides exposure to U.S. companies engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds about 46 stocks in its basket with each accounting for no more than 5.5% of assets. The fund has AUM of $1.4 billion in its asset base and charges 70 bps in annual fees. ARK Next Generation Internet ETF ( ARKW Quick Quote ARKW - Free Report) – Up 124.4% The COVID-19 pandemic has driven the e-commerce boom and changed the consumer landscape to a purely digital one. People have chosen to stay indoors in order to avoid direct contact, which in turn would boost demand for cloud computing, gaming, e-sports and streaming services. ARKW is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to cloud, enabling mobile, new and local services. The fund holds 50 stocks in its basket with AUM of $3.6 billion. It charges 76 bps in annual fees from investors. ARK Genomic Revolution Multi-Sector ETF ( ARKG Quick Quote ARKG - Free Report) – Up 122.9% The biotech sector has been performing well driven by the progress in the development of a coronavirus vaccine or treatment, and waves of mergers and acquisitions. In fact, this actively managed ETF has been the biggest beneficiary, focusing on companies likely to benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments along with improvements and advancements in genomics into their business. With AUM of $3.5 billion, the fund holds 47 stocks in its basket and has 0.75% in expense ratio (read: ETFs in Focus on Bayer's Bet on Gene Therapy). Amplify Online Retail ETF ( IBUY Quick Quote IBUY - Free Report) – Up 100.7% As more Americans prefer online shopping amid the pandemic, the online retail ETF got a boost. This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 58 stocks and has attracted $1.1 billion in its asset base. It charges 65 bps in fees per year (read: COVID-19 Cases on the Rise: ETFs to Bet On). Global X Lithium & Battery Tech ETF ( LIT Quick Quote LIT - Free Report) – Up 100% Rise in demand for electric vehicles, in which lithium is used for batteries that power cars, has helped this ETF to move higher. This product provides global exposure to a broad range of firms engaged in lithium mining, refining and battery production by tracking the Solactive Global Lithium Index. It holds 41 securities in its basket, charging investors 75 bps in annual fees. The fund has amassed $1.1 billion in AUM. Bottom Line
These products have not only built a better portfolio for investors this year but also bring in diversification benefits by eliminating company-specific risks to a large extent with lower costs. As a result, these are considered praiseworthy in the ETF space.
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