As the world continues to navigate the fast-changing tech landscape, megatrend investing has emerged as the hottest investing theme in 2021. Megatrends are powerful, transformative secular trends that frequently bring about permanent changes in the world around us. From Artificial Intelligence (AI) and robotics to clean energy and Exponential Technologies (XT), megatrends are constantly shifting the priorities of society, redefining business models and driving innovation.
Megatrend investing is all about capitalizing on these long-term structural trends with huge tailwinds and long growth runways.
Thematic exchange-traded funds (ETFs) allow you to invest in a number of the hottest trends and industries-- from cloud computing and blockchain technology to cybersecurity and clean energy. Thematic ETFs allow you to play a wider megatrend without forcing you to pick winners in what can sometimes be an onerous task.
Here are 3 of the most interesting new ETF themes in 2021.
After decades of stagnation and multiple false dawns, the hydrogen economy is now ready for prime time. Investments in hydrogen technologies have skyrocketed over the past two years with hydrogen being touted as the ‘fuel of the future.’ Meanwhile, industry experts are predicting that hydrogen could become a globally-traded energy source, just like oil and gas while the Bank of America says the industry is at a tipping point and set to explode into a $11 trillion marketplace.
Investors who wanted to gain exposure to the hydrogen sector have had to mostly rely on fuel-cell makers such as Plug Power Inc. (NASDAQ:PLUG), Bloom Energy Corporation (NASDAQ:BE) and Ballard Power Systems (NASDAQ:BLDP).
But hydrogen investors no longer have to narrow their focus so much after the launch of the first hydrogen-focussed ETF of the space--HYDRO.
Defiance Next Gen H2 ETF (NYSEARCA:HYDRO) is a new ETF launched by ETF Series Solutions.
HYDRO invests in stocks of companies operating across materials, chemicals, industrial gases, utilities, alternative energy resources, fuel cells, independent power and renewable electricity producers, renewable electricity, development of hydrogen-based energy source sectors. These can be either growth or value stocks of companies operating across diversified market capitalization.
The fund seeks to track the performance of the BlueStar Global Hydrogen & NextGen Fuel Cell Index using full replication techniques.
Top 5 HYDRO stocks include:
- Plug Power Inc (NASDAQ:PLUG)--10.47%
- Ballard Power Systems Inc (NASDAQ:BLDP)--6.42%
- NEL ASA (OTCPK:NLLSF)--6.30%
- Bloom Energy Corp (NASDAQ:BE)--5.82%
- ITM Power PLC (OTCPK:ITMPF)--5.70%
Over the past few months, ETF issuer Global X has added three new thematic exchange traded funds to its roster to cover the cutting-edge areas of blockchain, agtech and hydrogen power.
Global X Blockchain ETF (NASDAQ:BKCH) is an exchange traded fund launched and managed by Global X Management Company LLC. The fund invests in stocks of companies operating across blockchain companies including digital asset mining, blockchain and digital asset transactions, blockchain applications, blockchain and digital asset hardware and blockchain and digital asset integration sectors.
The crypto space has been particularly rocky this year due to increasing regulatory oversight. In the latest twist, news has emerged that a bipartisan infrastructure bill in Congress has proposed raising $28B from cryptocurrency investors, with any broker that transfers digital assets required to file a return under a modified information reporting schedule, as per Coindesk.
As a result, crypto equities such as the Grayscale Bitcoin Trust (OTC:GBTC), Coinbase (NASDAQ:COIN)and Riot Blockchain (NASDAQ:RIOT) have been falling despite bitcoin clawing its way back above $40k for the first time in months.
Although thematic investing is supposed to be somewhat easier than picking individual stocks in certain sectors, the truth of the matter is that it’s getting pretty jammed: Currently there are about 140 thematic ETFs out in the U.S. market that cover 3,200 different stocks.
So, what about investing in an ETF that targets the hottest themes?
If you want to take thematic investing to a whole new level, then the newly launched Amplify Thematic All-Stars ETF (NYSEARCA:MVPS) might be just the thing for you.
Launched on July 21, 2021, MVPS tries to aggregate the hottest thematic stocks in the market into a single ETF. The fund tracks an index managed by research firm ETF Action, which uses U.S. ETF ownership data to pinpoint the stocks and themes most popular with investors.
MVPS top 10 holdings are:
- Tesla Inc. (NASDAQ:TSLA)
- Nvidia Inc. (NASDAQ:NVDA)
- Square Inc. (NYSE:SQ)
- Amazon Inc. (NASDAQ:AMZN)
- Alphabet Inc. (NASDAQ:GOOG)
- Enphase Energy (NASDAQ:ENPH)
- Zscaler (NASDAQ:ZS)
- PayPal Inc. (NASDAQ:PYPL)
- Microsoft Inc. (NASDAQ:MSFT)
- Twilio Inc. (NYSE:TWLO)
You will notice that MVPS holds many popular stocks that can be found in multiple themes. ETF Action says it rebalances its holding every month to ensure that no stock makes up more than 5% of the index or ETF.
Here are other top megatrends with their respective ETFs that track them
- Robotics and AI (BOTZ)
- Clean Water (FIW)
- Cloud Computing (CLOU)
- Emerging Markets Infrastructure (EMIF)
- Emerging Markets Internet & Ecommerce (EMQQ)
- Cyber Security (HACK)
- Global Clean Energy (ICLN)
- Genomics Immunology and Healthcare (IDNA)
- Self-Driving EV and Tech (IDRV)
- US Infrastructure (IFRA)
- Global Infrastructure (IGF)
- Internet of Things (SNSR)
- Exponential Technologies (XT)