With over 2,300 ETFs to choose from, its not easy finding ones that excite you enough to put hard-earned money into with the goal that it grows substantially higher in the future. Luckily for you, I am continually searching high and low to find ETFs the average investor like yourself can not only buy but own over a period sometimes just months or other times years with the confidence that you will see a solid return. The current economic environment adds another challenge on top of finding quality ETFs to invest in, which is why I will also thoroughly explain why now is potentially a good time to buy.
The first ETF I would like to highlight is one that has already received a boost and will likely continue to move higher due to the Covid-19 Pandemic and how this global problem will likely have a lasting effect on the flow of business. The SoFi Gig Economy ETF (GIGE) has an inception date of May 2019 but now finds itself in a perfect storm situation where the fund was developed to benefit from the “gig economy,” which due to the pandemic and social distancing requirements seem to be the sweet spot everyone wants to be. The fund’s prospectus states its allocation based on these metrics;
30% to 60% Companies that directly facilitate and participate in revenue generation from gig economy businesses (e.g., app-based platforms, auction sites, web-based stores, and other commission-based platforms) 20% to 40% Companies that enable or support gig economy businesses in marketing and sales functions (e.g., social media platforms, messaging platforms) 5% to 20% Companies that facilitate financial transactions for gig economy businesses through apps or web-based platforms 5% to 15% Companies that support the ability of individuals to operate a gig economy business without participating in a commission or revenue-based model (e.g., companies providing health care, technology, or other back office services) 0% to 10% Other companies that are expected to benefit from the growth of gig economy businesses and associated lifestyle changes for individuals engaged in gig economy businesses
The funds top holdings include Twitter (TWTR), Alibaba (BABA), MercadoLibre (MELI), PayPal (PYPL), Square (SQ), and Lending Tree (TREE) to name a few. All companies that are primed to continue benefiting from the current pandemic and are set-up to be rock stars even once we have moved past the Covid-19 situation. And did I mention the fund is up 37% year-to-date?
The next ETF I would like to highlight is one I have recently talked about, but with the long-awaited arrival of sports, I thought the Roundhill Sports Betting & iGaming ETF (BETZ) should once again be highlighted. The companies that makeup BETZ have all been struggling, to say the least since sports where put on hold. And despite the fund being brought to market during the pandemic, at a time when sports where not being played, June 6th, 2020, it is essentially flat since that time, it shows that investors have an appetite for these types of companies. An appetite that will likely only grow once we start seeing the full array of sports being played.
BETZ is not the cheapest ETF to own with an expense ratio of 0.75%, but long term, it could offer a sizable return, especially once the pandemic, and shortened sports seasons is past us.
Finally, I would like to talk about another long-time favorite but more relevant than ever, the ETFMG Prime Cyber Security ETF (HACK). With the high-profile hack of Twitter and the reports that one of the leaders in the Covid-19 vaccine race, Moderna (MRNA), was the target of Chinese hackers. These security breaches prove that no one is truly safe from hackers; some hackers are still targeting even companies in situations that appear to be trying to benefit. Furthermore, regardless of whether we are in a pandemic or not, hacking and hackers are always going to be around. That is what makes this ETF good today, tomorrow, and ten years from now. The 60 companies that have a weighted-average-market-cap of $15 billion, which make up HACK, are they who’s who of the cyber-security world, and 84% of them are US-based organizations. The fund has an expense ratio of 0.60%, currently $1.5 billion in assets under management, and an inception date of November 2014, all of which make HACK a very well-rounded and trust-worthy ETF to park money in for a while.
Regardless of whether or not you agree that the three ETFs mentioned above should belong in your portfolio, remember that there are over 2,300 different ETFs you can choose from, with an extensive range of investment strategies. So, don’t stop looking until you find what you are comfortable with and what you believe will produce the best long- or short-term gains.
Matt Thalman
INO.com Contributor – ETFs
Follow me on Twitter @mthalman5513
Disclosure: This contributor owned shares of Square at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
