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 powerful trends in the stock market will affect companies not only for a single year, but also for a long time.
One of these major trends has been the drive for electric vehicles and renewable energy. Many individual stocks surfing this wave made big gains in 2020. Even if you prefer the diversified exposure that industry-focused exchange-traded funds offer, you could still have made a lot of money in 2020.
LIT data by YCharts.
O Invesco WilderHill Clean Energy ETF (NYSEMKT: PBW) and the Global X Lithium & Battery Tech ETF (NYSEMKT: LIT) were among the best ETFs of 2020. They are also moving forward in 2021, taking advantage of the wave of interest in electric vehicles, renewable energy and other clean technology initiatives.
A wilder way to buy EV
The Invesco Wilderhill Clean Energy ETF tripled in value to its shareholders in 2020. It also had a stronger start in 2021, increasing another 22% in just a week and a half.
The Invesco fund has a broad-based investment objective to seek out companies in any aspect of clean energy and conservation. In practice, this includes almost four dozen companies in specific areas ranging from electric vehicles and charging infrastructure to solar energy and lithium mining. Approximately three quarters of its shares are based in the United States. Best performing stakes include the Chinese EV leader NIO (NYSE: NIO), solar energy supplier SolarEdge Technologies (NASDAQ: SEDG), and mining company Lithium Americas (NYSE: LAC).
With an expense ratio of 0.70%, the Invesco ETF is not so cheap. However, for those who do not want the risk of holding fewer individual shares – or the hassle of buying dozens of shares to fully match the portfolio – the fund does a good job of offering considerable exposure across the energy sector. clean .
Image source: Getty Images.
Get a lithium charge and battery stocks
The Global X Lithium & Battery Tech ETF had slightly weaker results in 2020 than its peer here, but even more than doubled in the year. This ETF has a much narrower focus that focuses more on mining, refining and using lithium in the production of rechargeable batteries for a wide range of applications.
It is not surprising to see a much larger proportion of the ETF Global X portfolio in non-American companies. That’s because lithium is found in strategic locations around the world. Companies spring up where there is lithium to mine.
Global X performed well from its leading stock, Albemarle (NYSE: ALB), which is a lithium supplier. The stock more than doubled in 2020 as demand for lithium increased.
However, the ETF, which carries an expense rate of 0.75%, also undoubtedly received a major boost from its participation as a leader in electric vehicles. Tesla (NASDAQ: TSLA). With its dual role as a consumer of battery supplies and a producer of cutting-edge battery technology, Tesla’s return alone has made a huge contribution, despite the current inventory being only 5.5%. It is also helping ETF 2021 performance, as the fund is already up almost 15%.
LIT data by YCharts.
Expect more from battery technology stocks in 2021
Electric vehicle manufacturers are just beginning their efforts. Many start-up companies have not even started making vehicles yet. Even those at the front have a long way to go before they reach their pace.
This suggests that key component suppliers will perform well in the future. It is likely that 2021 will be even more successful for these two ETFs and the companies within their portfolios.