On this episode of the Wiser Wealth Roundtable podcast, the team discusses their top fund picks and predictions for the market in 2021.
Listen on Apple podcasts
Or through YouTube:
Brad’s Market Picks
The technology sector continues to be the star of the market. We especially saw this in 2020 with the pandemic. Firms like Zoom and Amazon benefited greatly from trends related to the pandemic like working from home and online shopping. Many other technology firms benefited from our change in habits this year. Vanguard recently put out a white paper on the Idea Multiplier effect. The theory is that every great idea begets other great ideas. Today, it is believed that for every one good idea there are 400 other ideas spawned from the initial idea. Vanguard’s analysis suggests that a recent surge in the Idea Multiplier portends a productivity increase to 1.2% annually over the next five years, double the rate of the past two decades. That will mean higher wages, higher profits and higher living standards across the globe.
Related to technology and innovation, Brad’s top ETF pick for 2021 is the ARKK ETF. This fund has had a tremendous run in 2020 and includes innovative and technology focused companies like Tesla, Roku and Zillow. Another similar ETF is SPDR® S&P Kensho New Economies Composite ETF (KOMP). It had a 56% return rate in 2020 and is more global in nature than ARKK.
Matthews’ Market Picks
Sticking with a themed pick, Matthews chose funds that are based on clean energy and conservation. The Invesco WilderHill Clean Energy ETF (Fund) is based on the WilderHill Clean Energy Index (Index). The Fund normally invests at least 90% of its total assets in common stocks that comprise the Index. The Index is composed of stocks of companies that are publicly traded in the United States and engaged in the business of advancement of cleaner energy and conservation. This fund was up over 200% in 2020 and most analysts think it could do even better next year. First Trust and iShares also have clean energy ETFs. They include companies in the solar and wind energy, lithium batteries and similar industries.
Casey’s Market Picks
Casey was initially challenged to pick one sector or fund for this week’s discussion. He ultimately settled on Vanguard’s total stock market fund VTI. This fund seeks to track the performance of the CRSP US Total Market Index. It includes Large-, mid-, and small-cap equity diversified across growth and value styles. VTI did well in 2020; up 19.5%. Holdings include Apple, Amazon, J&J, Berkshire Hathaway, Tesla and more.
We see many investors who try to pick top performing stocks because they want quick wins or best bets. At Wiser, we encourage our clients to build wealth over time. We do this with very low cost ETFs and focus on long-term success, not through short-term rare wins.
Market predictions for 2021
The team is very bullish and excited about market performance in 2021. This is based on coronavirus vaccine efficacy, low interest rates and pent up demand.
There are still some risks next year related to vaccine distribution and acceptance on top of high unemployment related to businesses. But overall, the team is excited about the future and will always bet on the resilience of Americans and our ability to overcome setback.