Exchange-traded funds (ETFs) can be a useful way to diversify your portfolio, speculate on markets and track the value of given assets. But what ETFs are worth investing in? Here are some ETFS to keep an eye on in 2021.
What is an ETF?
An exchange-traded fund (ETF) is a type of investment fund that can be traded on an exchange, much like a stock. ETFs are similar to mutual funds in that both are investment funds, but where ETFs are bought and sold throughout the trading day, mutual funds are not traded on an exchange and only trade once a day when the market closes.
ETFs are created by the fund providers who own the underlying assets, who design funds to track their performance, then sell shares in that fund to investors. Shareholders own a portion of an ETF, but don’t own the underlying assets in the fund. To find out more about ETFs, check out our blog post on them here.
Aberdeen Standard Physical Silver Shares ETF (SIVR)
SIVR is a grantor trust, a type of investment trust that offers a certain degree of tax protection. The ETF tracks the performance of the price of silver; physically backed by silver bullion held in a vault located in London, the fund provides investors with a convenient and cost-effective way to invest in a major precious metal. The fund is best utilised as a safe haven during times of market uncertainty as opposed to being a part of a long term buy-and-hold strategy.
First Trust United Kingdom AlphaDEX Fund (FKU)
FKU is a multi-cap value fund, which targets the NASDAQ AlphaDEX United Kingdom Index. The index holds stocks from the NASDAQ United Kingdom Index that have been identified based on value and growth factors according to a ranking methodology. The fund holds about 76 stocks, with the top 10 holdings accounting for just under a quarter of assets.
Invesco S&P MidCap 400® Pure Value ETF (RFV)
RFV targets the S&P MidCap 400 Pure Value Index, an index of mid-cap companies selected from the S&P MidCap 400 based on book value-to-price ratio, earnings-to-price ratio, and sales-to-price ratio. The average market capitalization of a company in the RFV portfolio is about $4.0bn. RFV holds about 107 stocks, distributing its funds evenly across its holdings.
Invesco S&P SmallCap 600 Pure Value ETF (RZV)
RZV is structured similarly to RFV above, although it tracks the S&P SmallCap 600 Pure Value Index. The average market capitalization of a company in the fund’s portfolio is about $962m. RZV holds about 168 stocks in a portfolio that is evenly distributed, with the largest holding accounting for under 1.6% of assets.
iPath Series B Bloomberg Copper Subindex Total Return ETN (JJC)
JJC is an exchange-traded note (ETN), an unsecured debt instrument that tracks an underlying index of securities and trades like a stock. ETNs share similar characteristics to bonds, but do not make periodic interest payments. The fund tracks the performance of the Bloomberg Copper Subindex Total Return, an index that reflects the potential returns of an unleveraged investment in copper futures contracts. JJC provides investors with a potential hedge against inflation by investing in copper futures.
iShares MSCI United Kingdom Small-Cap ETF (EWUS)
EWUS is a value-focused ETF that targets the MSCI United Kingdom Small Cap Index, which consists of stocks with market capitalisations representing the bottom 14% of the British securities market; these primarily include companies from the consumer discretionary, financial and industrial sectors. EWUS holds roughly 258 stocks, with invested assets distributed evenly across these holdings.
SPDR Solactive United Kingdom ETF (ZGBR)
ZGBR is a blended fund, including a mix of value and growth stocks, that targets the Solactive GBS United Kingdom Large & Mid Cap USD Index NTR. The index is a free float-adjusted market capitalisation-weighted index, including large-cap and mid-cap companies in the UK market. The index offers exposure to common and preferred stock, Equity Real Estate Investment Trusts (REITs) and other products. ZGBR holds about 107 names, with the top 10 positions accounting for about roughly 40% of assets.
United States Copper Index Fund (CPER)
CPER is a commodity pool, a type of private investment combining investor contributions with trade commodities futures and options. The ETF tracks the SummerHaven Dynamic Copper Index Total Return, which reflects the performance of the investment returns of a portfolio of copper futures contracts and copper-related futures contracts.
In addition to acting as a potential hedge against inflation, copper is widely used in various construction and industrial processes. By investing in liquid futures contracts along the copper futures curve, CPER allows investors to potentially profit from increased demand for raw materials in a growing economy.
Vanguard S&P Mid-Cap 400 Value ETF (IVOV)
IVOV targets stocks in the S&P MidCap 400 Value Index, which consists of value companies from the S&P 400. The fund is weighted heavily in three sectors: financial (21.8%), industrial (15.9%), and consumer discretionary (14.4%). Assets are evenly distributed across the roughly 308 holdings in IVOV’s portfolio, with the largest holding accounting for just 0.83% of assets.