Stock Watch

ETFs To Watch In 2020

There’s a lot in store for 2020. It is a US election year, Brexit could finally “get done”, trade wars could be pacified and pressures on government and business to be more environmentally and socially responsible will keep increasing.

So with that macroeconomic rollercoaster in mind, here are 20 ETFs to watch out for in the new year:

 

1. SPDR S&P 500 [SPY]

A hugely popular ETF that tracks US large-cap stocks in the S&P 500 such as Microsoft [MSFT] and Apple [AAPL]. Its YTD daily total return is currently at 28.71%. This should be further buoyed in 2020 by low US interest rates and a resilient domestic economy. Analysts at Credit Suisse forecasts the S&P 500 will increase by 8% to 3,425 by the end of 2020.

28.71%

YTD daily total return

  

2. iShares Core S&P 500 [IVV]

This also tracks the performance of the S&P 500, with holdings such as Amazon [AMZN] and Johnson & Johnson [JNJ]. It has a YTD daily total return of 28.85%.

 

3. Vanguard S&P 500 [VOO]

One more fund which provides exposure to some of the US’s biggest companies, tracking a YTD daily total return as the iShares Core S&P 500 ETF.

 

4. Financial Select Sector SPDR Fund [XLF]

Holdings in this ETF include Berkshire Hathaway [BRK] and JP Morgan Chase & Co [JPM], and its YTD daily total return is currently at 30.82%. Further growth is expected in 2020, helped by low US interest rates, recovering housing market and consumer spending pickup.

30.82%

YTD daily total return

  

5. Industrial Select Sector SPDR Fund [XLI]

This fund includes industrials securities from sectors such as aerospace, transportation and machinery. Holdings include Boeing [BA] and General Electric [GE], and its YTD daily total return is 28.78%. This is an ETF likely to be boosted next year by a rise in domestic spending and a potential resolution to the US/China trade dispute.

 

6. Vanguard Total Stock Market [VTI]

This tracks an index of US stocks of various market capitalisations, although the bulk is larger firms. Its YTD daily total return is 28.19%. It offers a broad exposure to the US economy from technology to health and allows an investor to spread their risk.

 

7. Vanguard FTSE Developed Markets [VEA]

It tracks the performance of large-cap stocks such as Nestle [NESN], Samsung [005930] and HSBC [HSBC] in developed markets aside from the US. Its YTD daily total return is 18.47%, and while returns may be slimmer it tends to be less volatile than investing in emerging markets.

18.47%

YTD daily total return

  

8. iShares MSCI EAFE[EFA]
As above, it tracks large and mid-cap stocks such as Roche [RHHBY] and Toyota [TM] in developed markets including Japan and the UK. It does not include US or Canadian stocks and thus could shield investors from any downturn in those economies or election volatility in 2020. YTD daily total return is 20.59%.

 

9. iShares Russell 2000 Growth ETF [IWO]

This tracks small-cap growth firms in the US such as NovoCure [NVCR] and Arrowhead Pharmaceuticals [ARWR]. It’s already performed well in 2019 – YTD daily total return is 26.13% – and it will benefit from a resilient US economy and improving consumer sentiment. Investor Ian Bezek has said: “It is focused on companies with strong tailwinds at their backs. Nearly 30% is invested in healthcare companies allowing it to profit from the biotech revolution. Industrials should also do well with the Fed easing and the economic cycle turning back up.”

“It is focused on companies with strong tailwinds at their backs. Nearly 30% is invested in healthcare companies allowing it to profit from the biotech revolution. Industrials should also do well with the Fed easing and the economic cycle turning back up” - Investor Ian Bezek

 

10. The Alternative Harvest ETF [MJ]

This tracks cannabis-related stocks such as Canopy Growth [WEED] and Tilray [TLRY]. It’s been a tough 2019 for the sector given disappointing sales and health concerns leaving YTD daily total return down 30.03%. But Tim Biggam of InvestorPlace says: “The selling has gone too far, too fast. It is ready to roll again. The cannabis market is expected to grow at an annual rate of 30% over the next four years. The ability to buy into an industry at the formative stages makes it a solid addition.”

“The cannabis market is expected to grow at an annual rate of 30% over the next four years. The ability to buy into an industry at the formative stages makes it a solid addition” - Tim Biggam of InvestorPlace

 

11. Invesco Solar [TAN]

This tracks stocks tied to solar technology such as First Solar [FSLR] and Sunrun [RUN]. YTD daily total return is a whopping 59.53%, and it has been boosted by a growth in investor interest in ESG issues, which will no doubt continue apace in 2020.

 

12. iShares US Home Construction [ITB]

It holds US homebuilder stocks such as D.R. Horton [DHI] which have been boosted by growing consumer confidence and low mortgage rates. Its YTD daily total return is 51.42%, which should continue so long as the US economy remains robust.

51.42%

YTD daily total return

  

13. VanEck Vectors Semiconductor [SMH]

This tracks chipmaking stocks including Texas Instruments [TXN] and Qualcomm [QCOM]. Despite exposure to the China/US trade war, semiconductor stocks are likely to continue to perform well boosted by surging markets such as autonomous cars, Internet of Things and gaming. Its YTD daily total return is a very positive 60.03%.

 

14. Global X MSCI China Consumer Staples [CHIS]

This focuses on the Chinese consumer market and features related stocks such as conglomerate China Resources [1109] and liquor producer Kweichow Moutai [600519]. YTD daily total return is 48.03% and it’s set to continue performing well in 2020, due to Chinese consumers’ resilient spending.

48.03%

YTD daily total return

  

15. iShares MSCI Emerging Markets [EEM]

This tracks emerging market stocks such as Alibaba [BABA], Tencent and Samsung. It’s YTD daily total return is less impressive than other ETFs mentioned here at 14.52% due to the volatility emerging markets tend to experience. However, values can rocket up quickly. Country growth rates in emerging regions still generally outperform those of developed nations.

 

16. Vanguard Health Care Index Fund [ETF]

This looks at healthcare stocks including Johnson & Johnson and Pfizer [PFE]. YTD daily total return is 19.45%. The sector is awash with upbeat new drug data and M&A activity and would be a good defensive hold if the global economy becomes unwell.

 

17. SPDR S&P Biotech ETF [XBI]

It tracks smaller biotech stocks such as Arrowhead Pharmaceuticals and Biogen [BIIB] and has a YTD daily total return of 32.4%. Biotech is at the cutting edge of healthcare and is anticipated to see further growth in 2020. This ETF should give investors wide exposure to new discoveries.

 

18. SPDR Bloomberg Barclays High Yield Bond [JNK]

This tracks the performance of the Bloomberg Barclays High Yield Very Liquid Index, with industrials being the largest sector represented. YTD daily total return is 14.02%.

14.02%

YTD daily total return

  

19. iShares MSCI ACWI Low Carbon Target [CRBN]

The focus of this ETF us companies in developed and emerging nations that have lower carbon emissions exposure than the broader market. Its YTD daily total return is 25.57% and it’s set to continue to gain from increased focus on government environmental and carbon emission targets in 2020.

 

20. SPDR SSGA Gender Diversity Index [SHE]

This ETF invests in US companies with a high percentage of women in executive and director positions. Holdings include Wells Fargo [WFC] and Walt Disney [DIS], and it has a YTD daily total return of 21.96%. Board diversity is an issue which will increase in importance and visibility in 2020.

21.96%

YTD daily total return

  

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