Now it looks like the wind is blowing in favor of the market. Although in 2021 it has been killed by the coronavirus pandemic, in 2021 it could experience a change in the US economy. Despite the obstacles caused by the pandemic, the Dow Jones industrial average has risen 5.8% during the year. Then the S&P 500 and Nasdaq Composite gained 14.8% and 42.2% year-on-year, respectively.
Factors fueling optimism for 2021
Congress finally reached an agreement on a coronavirus stimulus agreement, just in time before the shutdown deadline, according to a CNBC article. The bill, which includes another round of stimulus controls and additional unemployment benefits, will soon be put to a vote in the House and Senate, according to sources. The optimism surrounding the new stimulus package once again presents a very favorable case for the bullish market in 2021 amid the worst outbreak and its impacts on the US economy.
In addition, the chances of a divided Congress in the United States seem more likely, where Republicans may continue to control the Senate and Democrats, the House. Thus, as a result of this political deadlock, important and strict changes in the fiscal policies of companies will be very difficult to implement in the medium term. Therefore, easing concerns about important policy changes makes the investment environment friendlier for market participants.
The beginning of the process of inoculating people adds greatly to the optimism. Modern (MRNA) has begun shipping its first batch of coronavirus vaccine after receiving an emergency use authorization from the FDA. In particular, the FDA-related vaccine and biological products advisory committee had strongly supported Moderna’s coronavirus vaccine and voted 20-0 with one abstention, according to a CNBC article.
In addition, maintaining the Fed’s low interest rates and its position on inflation-related policies is expected to fuel bullish sentiment. Thus, Meghan Shue, head of investment strategy at Wilmington Trust, told CNBC’s “Trading Nation” that “we are the most bullish in the market we have been in for about a year,” according to a CNBC article.
In addition, Adam Crisafulli, founder of Vital Knowledge, has expressed optimism in the market saying that “in the eyes of stocks, the inexorable vaccination process, which is just beginning, is more powerful than current trends in cases and blockages, and this “Remember, the markets are too deep into a pit of pandemic despair. Remember, the three pillars of the rally remain very established: vaccines, strong corporate gains and massive incentives,” according to a CNBC article.
ETF areas for your new year selections
Here are some areas of ETFs that investors can consider to create a strong and impressive portfolio this new year:
Industrial ETFs
The industrial sector, which faced the disruption of global supply chains and the closure of factories, is expected to recover as the economy recovers from the slowdown caused by the coronavirus. The introduction of a coronavirus vaccine and the addition of stimuli are expected to boost demand and economic activities in the sector.
In this scenario, investors can look at it SPDR fund of the select industrial sector XLI, Vanguard Industrials ETF VIS, US Industrial iShares ETF (IYJ) i Fidelity MSCI Industrials Index ETF (FIDU) (see all industrial ETFs here).
Small capital ETF
Small-cap stocks, as indicated by the Russell 2000 index, have outperformed the overall market and hit new all-time highs. The upswing is largely led by small business firms that are closely tied to the U.S. economy and are therefore well positioned to outperform as the economy improves. These actions usually outweigh the improvement in the US economy. Recent developments are expected to lead to an improvement in the economy. Therefore, investors may consider it US Small Cap ETF Schwab SCHA, ETF SPDR S&P 600 Small Cap SLY, Vanguard S&P Small-Cap 600 ETF (VIOO) i John Cap Hancock multifunctional ETF (JHSC) (read: Grab these ETFs now to get an impressive end by 2021).
Emerging market ETFs
Along with the development of the coronavirus vaccine and the introduction of another round of stimuli, there are other factors that present a very strong case for emerging market ETFs. There was an impressive rebound in this ETF area following a weak dollar against the basket of currencies that has attracted more capital to emerging markets. The greenback is expected to be under pressure in the short term, given the billions of cheap money flowing into the economy and the prospect of further relaxation. Continuing, a Biden administration is expected to reduce uncertainty in international trade policy and reduce trade tensions with China, according to sources.
Given the enormous potential of emerging markets, we have highlighted some ETFs for exposure to it:ETF iShares Core MSCI Emerging Markets ETF IEMG, ETF iShares MSCI Emerging Markets ETF EEM, Schwab Emerging Markets Equity ETF (SCHE), SPDR Emerging Markets Portfolio ETF (HOPE) and WisdomTree Emerging Markets Equity Income Fund (DEM) (read: emerging market success record: 5 best performing ETFs in YTD).
Ecommerce ETF
The pandemic has given a boost to the e-commerce industry as people continue to prefer to stay indoors and shop online for all the basics, especially food. Following the digitalization trend, the upcoming holiday season in the US is expected to significantly increase online sales.
According to the latest data from the National Retail Federation (“NRF”), an estimated 186.4 million Americans bought in-store and online over the Thanksgiving weekend (from Thanksgiving thanks until Cyber Monday). The figure was higher than 165.8 million in 2018, but below last year’s 189.6 million. The number of online-only shoppers rose 44% over the weekend to 95.7 million. Black Friday and Saturday also experienced impressive growth in online activity. The number of online shoppers on Black Friday exceeded 100 million for the first time, 8% more than last year. The number of online Saturday shoppers also rose 17% year-over-year.
According to a Statista report, the global e-commerce market is expected to generate revenue of $ 2.4 trillion by 2021. The figure is expected to reach $ 3.3 trillion by 2025, with a CAGR of 7, 4% between 2021 and 2025.
In this context, let’s look at some ETFs that can benefit from the new buying trend: Amplify online retail ETFs I BUY, ETF ProShares Long Online / Short Stores CLIX, ETF ProShares Online Retail (ONLN) i Global X Ecommerce ETF (EBIZ) (read: 3 ETFs and industry stocks will shine despite November retail sales).
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Vanguard Industrials ETF (VIS): ETF Research Reports
Industrial sector Select SPDR ETF (XLI): ETF research reports
iShares MSCI Emerging Markets ETF (EEM): ETF research reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF research reports
Amplify ETF Retail Retail (IBUY): ETF Research Reports
SPDR S&P 600 ETF Small Cap (SLY): ETF research reports
Schwab US SmallCap ETF (SCHA): ETF research reports
ProShares Online Short Store ETFs (CLIX): ETF research reports
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