Canadian entrepreneur Simion Kronenfeld relies upon a wide range of investments and diversification in order to maintain and grow his fortune. When having the chance to speak with him, Kronenfeld explains that ETFs, or exchange-traded funds, provide individuals with the ability to buy into a very diversified set of investments at a low cost ultimately managing risk. So rather than buying stocks in a single company, you invest in multiple businesses. Given the popularity of ETFs on the rise, here are five of the top exchange traded funds to buy into during 2021.
Vanguard S&P 500
The S&P 500 measures the success of the 500 largest companies in America, based on market capitalization. The Vanguard ETF follows the S&P 500 and has returned 18% in 2020, with the average return over 20 years being 10-11%. With billions of dollars in assets and a low annual cost of $3 per $10,000 invested (a 0.03% management fee), significantly less than the 0.83% average expense ratio for similar funds, this is a good option for somebody who wants a reliable return on investment. Kronenfeld advises that, “The market is almost certain to continue growing, meaning that the risk stays low throughout the investment process, yielding steady returns.”
Invesco QQQ Trust
The Invesco QQQ trust is a good ETF for those who are interested in investing in technology stocks and a great option for investors that want exposure to some of the biggest names like Tesla, Apple, Google, etc. When rising Nasdaq stocks get big, they are sure to secure a spot on the QQQ. This is a low-hassle way to own a diversified collection of hot stocks . The fund costs $20 for every $10,000 (a 0.20% expense ratio), which is standard for this type of fund, and is one of the largest ETFs out there today. 2020 was a banner year for the Invesco QQQ Trust, with the ETF seeing growth of a remarkable 48 percent. Whether this trend continues in 2021 still remains the question, but the chances of it continuing to see growth are very high and Simion Kronenfeld is confident in the future of such an investment.
Vanguard High Dividend Yield
The Vanguard High Dividend Yield tracks the FTSE High Dividend Yield Index, which focuses specifically on American companies that provide high-dividend yields. Although it saw only marginal growth in 2020, it is still extremely profitable. With a relatively low management fee of only $6 per $10,000 (0.06% expense ratio), the amount that you buy into the stock likely won’t overshadow the potential returns that you will receive. Keep in mind that on top of potential capital appreciation in the value of the fund, you will receive steady dividends between 2.50-3.50%.
Invesco Dynamic Leisure and Entertainment
The entertainment industry took a hard hit in 2020 as a result of the pandemic, especially sectors such as hospitality, since everyone was in a state of emergency lockdown due to COVID-19. However, as the world begins to open up in 2021, the opportunity for a turnaround is right there. This fund charges a higher management fee, requiring $63 per $10,000(0.63% expense ratio), however the slight dip recently might set up wise investors for a solid return in the future, given that the purchase of this ETF was timed correctly. Future expectations that are consistent among most forecasts are that the hospitality and entertainment industries are expected to be an extremely hot market, with pent-up demand causing a high expected growth rate.
VanEck Vector Gold Miners
When things get volatile and uncertain, people often turn to the reliability of gold. The management fee for this ETF is $52 per $10,000 (0.52%), but the fund’s performance increased by more than 20 percent over the course of 2020. Most notably, the fund focuses not on buying and selling gold itself, but rather invests in the miners directly. This provides easy access to the means through which gold is acquired, which is more reliable in the long run. As inflation continues to rise, gold will remain a good hedge against currency, which is why within the next decade, we can expect a healthy return.
If you are looking to invest in ETFs, these five funds offer an excellent array of options from which to choose in 2021. They are not automatic formulas to success, but somebody who stays savvy and educated can make a great deal of profit off of them. The vision to select which funds are about to break loose and which ones have hit their limit is very much a talent that successful entrepreneurs like Simion Kronenfeld have, and that guides them to success in life. Follow this example yourself by analyzing what options work best for your situation, planning appropriately, and being aggressive with your investments when the time comes, in order to maximize risk-adjusted returns.