6 Predictions for the ETF World in 2021
Zacks Investment Research | Jan 05, 2021 01:00AM ET
The year 2020 as a whole could easily be attributed to the COVID-19 outbreak, the resultant lockdown and economic sufferings, but some real relief came in the fourth quarter. Back-to-back positive vaccine updates and Joe Biden’s win with a divided Congress (so far assumed) boosted markets in November.
The winning spree continued in December with Trump’s signing of the second round of a virus stimulus deal. Overall, Wall Street is hovering at record highs with global markets too moving along. The S&P 500, the Dow Jones and the Nasdaq Composite added about 14.6%, 6% and 41.8%, respectively, in the past one year (as of Dec 31, 2020).
This is the situation in which we are entering 2021 and can see some important ETF trends are emerging with full force.
h3 Oil Prices Likely to Remain Range Bound Despite Vaccine Rollout/h3Several factors including OPEC’s output decision and shale production will rule the oil market in 2021. As of now, shale output is rising with falling costs of hydraulic fracturing or “fracking ,” and rising commodity prices.
survey by the Dallas Federal Reserve reported that shale firms needed less than $30 a barrel in most fields to make up for their operating expenses for existing wells. Companies could operate profitably in West Texas’ Permian basin for less than $40 a barrel, including drilling costs. With the current $48-oil price, we think those companies may beef up production in 2021.
On the other hand, Iran is planning to sign agreements will be on the road to $50,000 probably in the first quarter of 2021,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, one of the world’s biggest crypto lender, as quoted on Yahoo Finance.
Sergey Nazarov, the cofounder of Chainlink, said a few days back that “rising inflation and increasingly negative views of modern monetary policy are forcing investors to look for alternative ways to preserve the value of their capital,” as quoted on Businessinsider .
Corporations’ greater acceptance in allowing customers to hold bitcoin and other virtual coins in their online wallets and several central banks’ intention of rolling out digital currencies have been favoring the cryptocurrency. In fact, a bitcoin ETF could finally see the day of the light in 2021 as VanEck filed an application with the SEC lately. Notably, the SEC had earlier rejected several bitcoin ETF proposals, including an effort from VanEck.
Investors can definitely familiarize with the concept of bitcoin through blockchain ETFs like Amplify Transformational Data Sharing ETF (necessary measures ."
VCAR , Simplify Volt Cloud and Cybersecurity Disruption ETF (VCLO) and Simplify Volt Fintech Disruption ETF (VFIN).
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Small Caps May Record Double-Digit Gains Again in 2021
The Russell 2000 Index outperformed the bigger equity gauges by a wide margin as the pint-sized stocks ruled in Q4 of 2020. The small-capitalization focused iShares Russell 2000 ETF IWM added 28.5% in the past three months, breezing past three other big equity gauges. Overall, the fund was up 18.3% past year.
Since small-cap stocks are more closely tied to the domestic economy, stimulus hopes and vaccine news boosted the segment even more. The trend is going to favor the segment throughout 2021 as economic recovery will be in process. However, one should keep a close tab on the peaks and troughs in new COVID-19 cases before investing in this area (read: Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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