Exchange-traded funds (ETFs) give investors easy access to specific areas of the market with diversification to reduce company-specific risk. So, you can focus on the themes or trends you are bullish on. Here are the best ETFs for 2022 and beyond!
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Clean energy ETFs
The transformational shift from fossil fuel to clean energy is still ongoing for the long haul. So, clean energy stocks, as a group, should have growth prospects over the next couple of decades. Investors seeking growth can consider having exposure to a clean energy ETF such as BMO Clean Energy Index ETF (TSX:ZCLN).
ZCLN is a global ETF diversified across multiple sectors. It has about 37.8% exposure to the United States, 12.4% to Denmark, 7.2% to Canada, 6.6% to Spain, 6.2% to China, 6.2% to Portugal, 5.4%, Germany, 2% to South Korea, 2% to Austria, and 14.2% in other regions of the world. Its sector exposure includes electric utilities (21%), semiconductor equipment (18%), renewable electricity (15%), heavy electrical equipment (14%), electrical components (11%), multi-utilities (8%), semiconductors (5%), oil and gas refining (2%), and others (6%).
The clean energy ETF holds about 75 securities. Its top 10 holdings make up about 53% of the fund. Its management expense ratio (MER) is 0.40%. ZCLN has only been out for about a year, so it’s not very well known. It has roughly $57.7 million of net assets. According to Yahoo Finance, at $18.17 per unit, it trades at more than a 13% discount from its net asset value (NAV) and has an average volume of 12,914. Notably, BMO Global Asset Management gives ZCLN the highest-risk rating.
Tech ETFs
Technology is a must-invest area. It brings innovation that can transform the world. At the same time, new technology can disrupt old technology, and in the worst- or best-case scenario (depending on which side you’re on), new technology can make old technology obsolete!
If you’re looking for peace of mind and capital preservation with long-term growth prospects, you should consider Invesco QQQ Trust (NASDAQ:QQQ), which includes top holdings that are well-known mega-cap tech stocks: Apple, Microsoft, Amazon, Tesla, Alphabet (Google), Meta Platforms (Facebook), NVIDIA, etc. The QQQ ETF has been available since 1999. It is very liquid with net assets of about US$215 billion and an average volume of 51.1 million.
If you can stomach the higher risk for greater growth potential, you can look into Renaissance IPO ETF (NYSEMKT:IPO), which, as the website describes, is “designed to hold a portfolio of the largest, most liquid, newly-listed U.S. IPOs. Each quarter when the ETF is rebalanced, new IPOs are included and older constituents are removed. At quarterly rebalances, constituents are weighted by float-adjusted market capitalization with a cap imposed on any weightings exceeding 10%.”
Currently, the IPO ETF’s largest holdings are Uber (8% of the fund), Snowflake (7%), CrowdStrike (4%), Zoom Video Communications (4%), Datadog 4%, Airbnb (3%), and Palantir (3%). The ETF has net assets of about US$390 million. According to Yahoo Finance, at US$47.72 per unit, it trades at a 13% discount from its NAV and has an average volume of almost 137,000.
