2020 is finally drawing to a close, marking the end of an eventful year in every respect. Hardly surprising, there has been a lot of movement on the financial markets in 2020 due to COVID. The developments regarding a vaccine give hope for an end of the Corona crisis, but the pandemic is not over yet and will probably continue to influence the markets in 2021. Nonetheless, we went ahead to find out which 7 ETFs are the most promising for 2021 and beyond here!
1. iShares Global Clean Energy ETF (Dist)
Since the energy transition to renewables was initiated a few years ago, many investors sensed their investment opportunities in sustainable energy. In 2020, utilities will primarily benefit from the stay-at-home measures, but the focus on low-emission policies will certainly continue even beyond the Covid-19 crisis, so corresponding ETFs are still promising. The iShares Global Clean Energy stands out in particular, with a fund volume of over 3 billion euros. Although the costs are comparatively high at 0.65%, the share price has doubled this year alone. The largest positions in the portfolio are, providers of solar modules such as Sunrun and Solaredge, manufacturers of fuel cells such as Plug Power or manufacturers of wind turbines (Vestas Wind System). In total, the ETF's investments are distributed among 30 companies involved in the production of clean forms of energy or the manufacture of equipment and technologies in this field.
2. VanEck Vector Video Gaming and eSports ETF
Sales in the eSports sector have grown by an average of 28% over the past 5 years and experienced another strong push in 2020 due to the restricted leisure options. Since the restrictions in the wake of the Corona crisis will probably prevail in 2021 as well, the sector continues to show promise. But also aside from the growth that is driven by the pandemic, the video gaming market is growing rapidly. The VanEck Vector Video Gaming and eSports ETF tracks the sector well and has performed very strongly since its inception in mid-2019. This year alone, the ETF has gained over 70%, doubling its performance since inception. The largest positions in the portfolio are Nvidia and Tencent, which are based in the U.S. and China, respectively. The regional focus is clearly on the US, Japan and China, as these are of course the most promising markets in the eSports sector.
3. iShares STOXX Europe 600 Travel & Leisure ETF
In 2020, the travel sector suffered severely from Corona's restrictions and more than almost any other industry. Unfortunately, there currently is no ETF that focuses exclusively on the travel industry. The ETF which represents the sector best is the STOXX Europe 600 Travel & Leisure ETF. It tracks large, mid and small caps from various industrialized countries in Europe. Unsurprisingly, the ETF's performance this year was negative, as it decreased by almost15%. However, the investments in the leisure sector were able to partially compensate for the losses of the companies in the travel sector this year. The largest position in the portfolio is therefore currently the gambling company Flutter Entertainment constituting almost a quarter (!) of the total fund volume. Other positions include the Intercontinental Hotels Group or Ryainair, which could make strong gains again next year, provided that the travel restrictions are lifted again.
4. iShares Automation & Robotics ETF
The megatrend of automation and robotics is nothing new, but is currently gaining momentum. We are just at the beginning of the development, which is why an investment in the field should be very promising. As machines are able to take over more and more manufacturing processes, the work of humans is supported or improved and brings companies an increase in productivity while saving costs and making work easier. The selected iShares Automation & Robotics ETF tracks over 100 companies developing technologies in the field. In addition, the companies are screened according to the ESG filter - meaning that there are no positions related to weapons or tobacco, among others, or oil and gas companies involved in serious ESG controversies. In the long run, the ETF is certainly interesting to participate in the megatrend. The selected ETF has a highly diversified company profile, with no position taking more than 3% of total assets. Since inception, the return per year has averaged around 18%, and in 2020 it was as high as almost 30%.
5. Amundi STOXX Global Artificial Intelligence ETF
Artificial intelligence is yet another trend that is becoming more and more widespread and is finding its way into more and more areas. Be it Alexa in our living room or assisted driving in our car that have become part of our everyday lives. Generally, the goal of artificial intelligence is to replicate human performance on computers in order to process problems independently. The selected ETF includes more than 250 companies that are considered well positioned to benefit from the increasing use of AI technologies. As a result, the ETF has gained nearly 50% since inception in October 2018, and investors can look forward to nearly 20% returns this year. As the trend continues to gain ground, the ETF remains very promising for the coming years.
6. iShares Healthcare Innovation ETF (Acc)
The pharmaceutical industry has been able to increase its sales enormously worldwide over the last decades. This is mainly due to the many new achievements in biotechnology through the increasing understanding of various diseases and applications in genomics. In addition, the topic is gaining relevance due to the aging society in most industrialized countries. If current trends continue, the U.S. is expected to spend half of its GDP on healthcare in the next 50 years. As a result of demographic change, more efficient and effective ways of delivering treatment and care will be required.
The selected ETF builds over 150 companies that generate at least 50% of their revenue from innovations that come from generic drugs, immunotherapy (e.g. stem cell treatment) or healthcare IT companies. Performance has already been very promising over the past few years, with a 40% gain in 2020 and nearly doubling since inception in 2016.
7. VanEck Vectors Semiconductor UCITS ETF
Semiconductors are of fundamental importance to all major technology trends. Artificial intelligence, robotics, e-mobility, etc. all require the use of chips and semiconductors. Corresponding companies such as Nvidia and TSMC have profited enormously from this development. Since it can be assumed that demand will hardly decline in the future, but rather increase with the increasing use of technologies, a semiconductor ETF is definitely promising for the coming year. Since many investors struggle to identify the right companies to include in their portfolios, the ETF represents the optimal way to participate in the trend without having to limit themselves to individual companies.
Until now, this option was only available to investors from the USA with the iShares PHLX Semiconductor. The iShares PHLX Semiconductor performed well in recent years and is the model for the new variant of VanEck. The VanEck Vectors Semiconductor UCITS ETF has been tradable in Germany since December 1 and is thus the first semiconductor ETF available on the German stock exchange. Only companies that generate at least half of their sales from semiconductors and have a market capitalization of more than $150 million are considered. In addition, no position may account for more than 10% of the total ETF fund volume. Currently, the index includes 25 positions, three-quarters of which are located in the United States. The largest positions currently are TSMC and ASML Holding.