My Top ETF's For The 2020's

Summary

• 2020 was one of the craziest years in financial history, leaving us in unprecedented territory for the year of 2021.
• This article covers 7 ETF's in different sectors that I believe will continue to see growth over the coming years.

The year of 2020 was one of the craziest years in economic history. After watching markets rally to all-time high’s in February the rise of the Coronavirus brought economic turmoil in March. Society bore witness to the biggest crash in the history of modern markets followed by unprecedented yearly gains in our in certain stocks mainly. If you bought stocks, such as Tesla, Square, Workhorse, or Nio in march you most likely have seen at least a 100% gain in it’s value if you held through to the rest of the year, possibly a lot more than that. Congrats if you are in that boat. However, 2021 is a new year and we are in uncertain time where nobody can exactly know what will happen with current all-time highs occurring after a pandemic. This article will cover seven ETF’s that I believe can reap monster as long over a long term outlook while also providing a diverse ETF asset portfolio that will give exposure to sectors of the market that have and should continue to see major growth due to their ground-breaking technology through the current decade.

First ETF: ARKW

When looking at different investment groups that run ETF’s one of the most talked about from 2020 have been ARK’s Actively Managed Innovation ETF’s. Each of Cathie Wood’s ARK ETF’s are up around 200% from their March lows. It looks as if this uptrend may continue through the next decade as each still has the potential for major gains. These actively managed funds focus on the future and innovation within society which is why now is the time to buy them as our society enters the fourth industrial revolution, a revolution focused on Internet of Things (IoT), Artificial intelligence (AI). Any of the ARK ETF’s will give your portfolio actively managed exposure to this revolution.

Personally I believe that ARKW will continue to see great gains over the coming years.  It’s largest holdings include Tesla (10%), Roku (7.15%), and Square (4.35%) all of which have seen lucrative gains of over 400% since their March lows. While many believe that some of these stocks will crash those who maintained this belief lost a lot of money this year.  Especially in a long term investment these stocks will continue to see success as through growing sales and revenue. Backed by the excellent active management that ARK Investments has displayed this ETF will only continued to be filled with breakthrough IoT and AI technology and Ark has displayed they are more than capable of being ahead of the modern trends and will continue to add major winners to this portfolio through active management.

Second ETF: IHAK

Another personal favorite long term position of mine would be IHAK which is up around 100% from it’s March low of $20.36 a share (Currently at $40.89 at the time I am writing this). To start my thesis on this investment I will share this. Since 2015 cybercrime has increased significantly over the past five years. In 2021 the world is estimated to spend $6 trillion in protecting itself for security breaches or “hacks”. This is a large increase compared to 5 years ago in 2015 when only around $3 Trillion was spent. (https://cisomag.eccouncil.org/cybercrime-will-cost-the-world-us6-trillion-by-the-end-of-the-year-study/). By 2025 we as a society are expected to spend $10.5 Trillion. (https://cybersecurityventures.com/cybercrime-damages-6-trillion-by-2021/). That is a major increase in cost and it correlates with the increase in how common and daily these attacks are becoming. The Covid-19 lockdown around the world only made this worse as can be seen in India where cyberattacks increased by 37% in Q1 of 2020. (https://ciso.economictimes.indiatimes.com/news/37-increase-in-cyberattacks-in-india-in-q1-2020-report/75962696). The correlation between innovative technology and these attempts at cyberattacks is blatant even to someone who doesn’t understand these “hacks” and as tech evolves these attacks will become more often and will evolve as well.

So with all of these facts my thesis on IHAK becomes clear. Cybersecurity is and will continue to be a industry with major growth over the next 5-10 years and is becoming more and more important both on an individual and corporate level. However when looking at the industry their have yet to be any clear winners. Enter IHAK, a ETF that’s current largest holding is actually cash (8.17%) waiting to be invested into Cybersecurity/tech companies that look like winners, but also provides diverse exposure to 45 different cybersecurity/tech stocks currently. In a rapidly expanding industry/market this type of exposure should make IHAK a winner over both the next 5-10 years.

My 5 Year Price Target would be around $120 a share with a 10 year Price Target between $200-220 a share due to the rapid expansion and importance of the industry to any companies’ data.

ETF Number 3: Roundhill Sports Betting & IGaming ETF (BETZ)

Sports betting and casino’s is a popular hobby for individuals who love sports and also those who love data. Many people who are not in legal states find a bookie or website to do it through anyways. Still most states have historically not allowed sports betting, especially online. However that trend is changing, with states legalizing in-person and online betting. Currently only seven states allow for online sports betting, with a few others such as Michigan, Iowa, Virginia  and possibly Florida possibly legalizing mobile sports betting sometime in 2021. This bodes well for the future of BETZ which focuses on a variety of sports books that are mainly online, and mainly consists of stocks whose online books that are rapidly growing such as Penn Gaming, and DraftKings. Both of which have seen well over 100% gains this year. Especially Penn Gaming whose March low was 3.75 and the rallied to almost over $100 a share ($99.24 1 year ATH). As more states legalize online betting this trend will only continue. Giving investors an opportunity to invest in an industry that has yet to be fully industrialized and mainstreamed. As more and more states legalize both mobile and in-person sports betting over the next 5-10 years I am sure BETZ gains will reflect this legalization and mainstreaming of sports betting. Through growth in the stock.

5 Year Target Price: $75 a share

10 Year Target Price: $120 a share

ETF Number 4: Invesco India ETF (PIN) Current Price: $22.99

Invesco's India ETF is an excellent growth play over the next decade+ and a hedge against China and current tensions with the America. While India has been one of the countries hit hardest by the Covid-19 due to one of the highest population densities in the world along with a lack of preparation among other factors. It is also one of the countries whose economy is rapidly expanding. This year alone global investors have put 38 Billion dollars into India’s tech sector (Businessweek). This country already has 500,000,000 mobile internet users and a population of over a billion people, there is still a lot of room for growth, economically speaking. Meaning that less than half of the India currently uses the internet. In my opinion this lack of internet usage by the country provides us investors with a fantastic long-term opportunity in a variety of ways.

First the lack of usage means there is room for a lot of growth in both technology sales and industrialization throughout the country. Second as I stated in the beginning of this segment the country is an excellent hedge against China who currently stands as the largest exporter of goods to the U.S. However as relations with China have intensified over the past four years the trend of China being the biggest exporter to the U.S may change. Putting India in a position to gain more of a share of exports to the U.S which would be a fantastic boost to their economy. Finally when looking at the long-term India may surpass China in population and this could happen sooner than most anticipated. As in 2018 India’s population was only 40 million people behind China and accounts for 17.7% of the world’s current population. As I previously stated less than half of the population are currently using mobile internet devices meaning that a long-term investment into India would be investing in the modernization and utilization of technology by nearly new users 800,000,000. A massive market and opportunity that you will not find anywhere else in the world.

(Sector Allocation PIN ETF). ( https://www.invesco.com/us-rest/contentdetail?contentId=7d42fd05f0e21410VgnVCM100000c2f1bf0aRCRD&dnsName=us)

Overall with this opportunity and PIN’s current price I consider this a tremendous opportunity for growth in a country that has been late to the industrial revolution for various historical reasons.

5 Year Price Target- $40

10 Year Price Target- Somewhere between 60-80 really depends on the expansion of India into technology and how quickly there population modernizes.

ETF Number 5: Advisor Shares Pure Cannabis (YOLO)

The next ETF I have in this portfolio is truly what I believe to be a YOLO (You only live once) type of play, because it is an industry that only recently has become legalized and socially acceptable around the world. Especially in America it has become clear that as more and more states legalize marijuana it takes another step closer to being federally legal. The only thing blocking it at this point in time is the senate. If democrats are elected in Georgia Marijuana will become federally legal, this will be a game changer for anyone who Is invested in the industry and the only remaining question is: Who will win the corporate weed war?

Nobody can truly answer this question yet. However with the legalization of Cannabis in Canada already complete I feel that a portfolio focused on the legalization of Marijuana and on American companies will be more profitable both in the upcoming year and long term. YOLO focuses on these American companies with it’s largest holdings including Curaleaf; currently the most profitable of all Marijuana companies. Innovative Industrial Properties (IIPR) which is not only up around 450% from it’s March low of $40.21 (USD) and around 150% YTD. Neither of these gains include the solid 2.70% Dividend the stock also includes. While IIPR may not be a buy as it currently sits at a little bit over $180 a share it certainly helps in making YOLO a buy.

Another company that I love included in this ETF is Trulieve which in Q3 of 2020 had a 93% growth in revenue year over year while also increasing the companies operating cash by 83%. It is also the 4th largest American grower, behind Curaleaf, Green Thumb Industries, and Cresco Labs. All of which are also in the top 10 holdings of this ETF. One risk in Trulieve is fact that  Trulieve currently has 73 dispensaries operating in 6 states. However, 65 of these dispensaries are in Florida. The positive catalysts that this company has going for it certainly outweigh the risks. Namely that recreational marijuana will be on Florida’s ballot most likely in 2022 and if it passes it would multiply Florida’s marijuana industries value (currently 1 billion USD) to a 2.5 Billion industry that Trulieve would have a majority market share of. Second Trulieve recently acquired Pure Penn who have 92 whole sale and retail locations and gives Pennsylvania state residents easy access to medical marijuana currently. If Pennsylvania follows it’s neighbor New Jersey in making cannabis legal recreationally then it will be a major win for Trulieve. These factors have Trulieve set up to be a major player in some states and poised for growth into becoming a billion-dollar company over the next 5-10 years. This is great news for the YOLO ETF as it is in the ETF’s top 5 holdings (6.47% of the portfolio).

Overall it is clear that Advisor Shares Pure Cannabis ETF is setup for great growth over the next five-ten years. As it holds the American companies that have already and will continue to see major growth in correlation to state and federal legalization of Marijuana. As the end of prohibition of cannabis nears and it becomes legal more and more throughout the country, this ETF will grow and could see major gains over the coming years.

ETF Number 6: IShares Silver Trust ETF (SLV)

The next pick in this portfolio is an ETF that is already had a great year in 2020, as SLV is already up 44% YTD. However I believe this is only the beginning of SLV’s upside and SLV is a very straight forward way to play the silver market which is why I am such a big fan. The trust itself holds Silver in a .50% expense ratio to it’s current AUM (Assets under management) currently holding 555,000,000 ounces of silver to it’s $14 billion AUM. It is also the most active and liquid of all silver positions one could hold which helps make SLV the easiest of all Silver ETF’s and positions one could hold.

Another reason I currently love this ETF is the way in which Silver tends to trade, historically speaking Silver tends to be purchased in the months of January, February, August and September. This trend correlates with SLV’s 2020 high being in August. As displayed in the chart below.

The chart above displays a clear trends in Silver being bullish of the short term based off the historic probability it will rise in both January and February. Since Silver and SLV hit their current all time high this past August and then retreated a bit through the fall. It is likely we will see it not only return to it’s all time high in January/February but hit a new all time high.

While the short term case leaves a compelling reason to purchase silver the long term case for silver is even more compelling. From a macroeconomic standpoint there are a few catalysts that should have Silver trend higher. The first of these catalysts is that the Current money supply around the world are at an unprecedented level across the world due to stimulus given out throughout countries to help people cope with the economic loses brought on by Covid-19. Second the U.S currently is sitting on half the global debt, with the dollar being lower in value and lots of money being printed along with a zero interest policy rate in practice a commodity such as silver or gold will most likely gain in value as it has throughout the past year. The reason for this gain is that over time both gold and silver tend to correct themselves in terms of the global money supply, with that money supply being increased with another round of stimulus checks. Gold and Silver will follow suit in having another positive correction based off this money supply.

ETF 7: Ark Genomics Revolution: (ARKG)

For the final ETF I am going back to Ark investments, as I believe their active management will allow for continued growth in the fund despite investing in industries that are still developing as these biotech companies are aiming to develop revolutionary technologies that will disrupt the medical industry. The fund focuses on investing in healthcare products and therapies that use biological organisms. This can be a risky industry but the winners, start-ups that develop a winning products often go from being penny stocks to major players in the market. For example lets take a look at Crispr and Invitae two of the funds largest holdings compared to SPDR 500 ETF over the past four years. There gains are clearly much higher than the S&P 500.

The same can be seen through another major holding. Exact Sciences, whose product Cologuard has provided long term investors with fantastic gains going from $6.57 on 1/1/16 to $132.49 on 12/31/20. A $657 investment in Exact Sciences on that day (100 shares) in 2016 would be worth $13,249 today. A massive gain for a relatively small investment.

(Chart taken from WSJ 5 Year Chart on EXAS).

While I am not necessarily advertising these stocks as “buys” currently my point in listing these massive share gains along is that the Ark Genomics ETF focuses on stocks that see major gains in share prices because of breakthrough products. I believe in the next decade we will continue to see breakthrough products such as these and that the ARKG ETF will be able to benefit and be ahead of the trends in terms of buying these products. Helping continue the massive gains ARKG has had over the past year and continuing for the years to come.