The stocks may have generated big gains this year, but it is entirely possible that you lost most of them. The pandemic-driven liquidation that first took shape in February took many people out of their positions, who were slow to retreat to the big recovery from the March low. The market has a knack for surprising most investors most of the time.
If you are not interested in pursuing individual actions in the coming year and want a more passive approach instead, there is a solution. In other words, having more funds traded on the stock exchange, or ETFs. They lend themselves to longer strategies and longer life maintenance periods.
Here are four of those publicly traded funds to start rounding your portfolio to 2021.
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1. Vanguard Value ETF
Since the infancy of the modern market, value stocks have generally outpaced growth stocks – in the long run. Since 2006, however, this has not been the case, and it definitely has not been this year. Year-to-date, growing names gained 38%, while value stocks lost 2% of their, well, value.
If you believe in the idea that nothing lasts forever, this may be the right time to change strategic gears and enter a value oriented fund like Vanguard Value ETF (NYSEMKT: VTV).
And many people think that this kind of leadership change is coming. Bank of AmericaAnalysts at, for example, wrote earlier this month: “Despite the recent turnover, extreme valuations and consolidated positioning suggest that we are in the early stages of a value cycle. The relative discount for value stocks remains almost two standard deviations below average. ” This sets the stage for greater gains in value names, possibly at the expense of growth stocks.
2. iShares MSCI Emerging Markets ETF
The anticipated turnaround for value stocks is a topic centered on the US market, but clearly investors are not limited to US stocks. There is a whole planet of publicly traded companies that are not necessarily traded like the shares of the United States.
Choosing winners among them can be difficult, of course, perhaps even more difficult than finding the best of the best localized names. An exchange traded fund like IShares MSCI Emerging Markets ETF (NYSEMKT: EEM) solves this problem by bundling the best of the best international names in one basket. Among the fund’s largest holdings are Alibaba Group Holding and Samsung, but also choose how SK Hynix and Reliance Industries, which are not even directly available to US investors.
The bomb is set for a particularly large 2021 of emerging market stocks, too, according to Morgan Stanley and the fund company Fidelity. Morgan Stanley’s chief economist, Chetan Ahya, explains in a post on the Morgan Stanley website: “Trade-dependent economies, such as Korea and Taiwan, are already recovering, while in large economies more oriented towards domestic demand, such as India and In Brazil, a series of indicators recently exceeded pre-COVID-19 levels and are registering positive year-over-year growth. “
3. ETFMG Prime Mobile Payments ETF
Digital and cashless transactions are almost nothing new, but they had a kind of moment in 2021, when the world struggled to buy and sell goods without making physical contact with anyone. Take along PayPal Holdings for example. Its total volume of facilitated payments during the third quarter of this year increased by 38% year on year, driven by the addition of 15.2 million active PayPal users. PayPal and other fintech actions like Square have been widely rewarded for being much needed solution providers in the midst of the pandemic, with several of these names more than doubling in 2020.
Your biggest upward movements can be in the rearview mirror, for sure. But that does not necessarily mean that these stocks still cannot leave behind some good gains in the coming year. MasterCardThe recently published forecast for 2021 suggests that between 20% and 30% of the new e-commerce business created specifically because of the coronavirus will remain online even after the pandemic has passed. In the meantime, the digital payments market has been and is growing anyway. UnivDatos Market Insights estimates that the global digital payments market will grow at a compound annual growth rate of more than 18% between 2021 and 2026.
Everything does ETFMG Prime Mobile Payments ETF (NYSEMKT: IPAY) an interesting prospect for the coming year.
4. iShares Global Clean Energy ETF
Finally, although it was obscured by politics, a pandemic and many other distractions, 2020 was a very progressive year for the clean energy movement. In fact, it was an exceptional year. The total capacity to produce energy from renewable sources such as solar and wind has grown by 4% last year, according to estimates by the International Energy Agency, thanks to a record 200 gigawatts in new installations.
The point is that the paradigm shift in the energy market can no longer be blocked by mere global contagion.
And there is more of this growth now that renewable energies are fast becoming the new norm. The IEA predicts that the production of wind and solar energy will eclipse that of natural gas in 2023, and the production of electricity from coal in 2024. In 2025, renewable energy is expected to be the largest source of energy in the world.
Of course, companies will be needed to build and install this type of production capacity, such as those that make up the iShares Global Clean Energy Fund (NASDAQ: ICLN). Among its biggest stakes are Plug Power, First Solarand Spain Renewable energy from Siemens Gamesa.