There’s an ETF for that! If investors can think of it, chances are that exchange traded funds (ETFs), also known as index funds, have been created to attract their money.
The more popular a trend, the more ETFs there seem to be focused on that trend. In the last month alone, three index funds that track the price of Bitcoin have cropped up, with a fourth ETF focused on Ethereum under regulatory review. (More on that below).
As ETFs tend to track stock indexes and industries, they are highly sensitive to trends and investor sentiment.
Below we look at four of the best new index funds of the last year.
- Purpose U.S. Dollar Bitcoin ETF (TSX:BTCC.U)
- Horizon Kinetics Inflation Beneficiaries ETF (NYSEARCA:INFL)
- VanEck Vectors Social Sentiment ETF (NYSEARCA:BUZZ)
- Roundhill Streaming Services & Technology ETF (NYSEARCA:SUBZ)
Best New Index Funds: Purpose U.S. Dollar Bitcoin ETF (BTCC.U)
Bitcoin is white hot as a growing number of banks, credit card companies, institutional investors and fintech concerns take up the digital currency.
This year could go down in history as the moment when Bitcoin and other cryptocurrencies went mainstream. Many people on Wall Street are so bullish on Bitcoin that they are forecasting it will eventually replace gold as a store of value. Some bulls are even proclaiming that Bitcoin will replace the U.S. dollar as the world’s reserve currency.
While those pronouncements may be a little too aggressive at this point in time, there’s no doubt that Bitcoin is becoming much more legitimate in the minds of investors and financiers.
While Bitcoin is enjoying a moment in the sun, buying, holding and storing the cryptocurrency is a huge pain in the butt. Cold storage, passwords, and other steps needed to securely store Bitcoin make it extremely difficult on owners.
More than a few people have lost fortunes along with their Bitcoin passwords. While a number of cryptocurrency exchanges have cropped up promising to store Bitcoin for people, many of them are suspect enterprises.
An easier route would be for investors to buy into the Purpose U.S. Dollar Bitcoin Exchange Traded Fund that launched in Canada in February of this year.
Not only does the BTCC.U ETF track the price of Bitcoin, but it also allows U.S. investors to take a position in American dollars. No storage required. This is a great option considering that there are no Bitcoin ETFs currently available in the United States.
To date, the Securities and Exchange Commission (SEC) has denied applications for Bitcoin and other cryptocurrency ETFs. In the current environment, investors can look to Canada to gain easy and relatively safe exposure to Bitcoin via index funds.
Horizon Kinetics Inflation Beneficiaries ETF (INFL)
Inflation is causing all kinds of chaos in financial markets this year. As Treasury yields rise, technology growth stocks are getting pummelled. Investors are fleeing to the safety of industrial, cyclical and banks stocks.
Despite several efforts by U.S. Federal Reserve Chairman Jerome Powell to reassure markets that the central bank is content to let the economy run hot and will not raise interest rates until 2023 at the earliest, markets continue to churn on inflation fears. What’s a retail investor to do in such a volatile situation? It’s one thing index funds seem to be made for.
Rather than continue getting beaten up by fears of inflation, consider trying to profit from a rise in inflation. The Horizon Kinetics Inflation Beneficiaries ETF enables investors to take positions in stocks of domestic and foreign companies that are expected to benefit, either directly or indirectly, from rising inflation.
The INFL exchange traded fund focuses on commodities and companies whose revenues are expected to increase with inflation without suffering a corresponding increase in expenses.
Holdings in the ETF include companies such as Archer Daniels Midland (NYSE:ADM), Brookfield Asset Management (NYSE:BAM) and Wheaton Precious Metals (NYSE:WPM). Since the end of January, the ETF is up more than 10% at around $27.
Best New Index Funds: VanEck Vectors Social Sentiment ETF (BUZZ)
In the age of “cancel culture,” reputation is everything, and social media is where companies and individuals live and die these days. A single Tweet today can make or break a company and impact its share price either positively or negatively.
For these reasons, it should come as no surprise that companies jealously guard their online reputation and focus on building social capital in the marketplace. Recognizing this fact, VanEck Vectors has launched its “Social Sentiment ETF,” which goes by the ticker symbol “BUZZ.”
The index fund’s stated goal is to track 75 American stocks that have the highest profile and the best reputation online, as aggregated from social media, blog posts and news articles.
So, what are these highly regarded stocks? Current holdings, which are updated monthly, include the likes of Apple (NASDAQ:APPL), Walt Disney (NYSE:DIS), Amazon (NASDAQ:AMZN), and Tesla (NASDAQ:TSLA) , among 71 other securities.
For people concerned about reputations and social capital, the BUZZ ETF could be for them. Since launching in early March, BUZZ ETF is up a little less than 10% at $24. This is definitely one of the best new index funds to keep your eye on.
Roundhill Streaming Services & Technology ETF (SUBZ)
Streaming services are proving to be the biggest disruption to the entertainment industry since the advent of the VCR.
The way people consume television shows and movies has been completely upended by streaming services. The shift has only been accelerated by the global pandemic that shuttered theatres and forced everyone to stream content while sheltering in place at home.
In only a few years, a glut of streaming services has cropped up to challenge the supremacy of Netflix (NASDAQ:NFLX). The Disney+ platform added nearly 100 million subscribers in fewer than 18 months, which shows you how quickly streaming can grow.
The next frontier in steaming appears to be live sports, which a number of services are scrambling to establish. With so many streaming options available today, a growing number of people are cutting the cord on cable television.
The Roundhill Streaming Services & Technology ETF aims to help investors capitalize on the rapid rise and incredible popularity of streaming services and related technology.
The exchange traded fund claims to be the first of the index funds to focus investment dollars in the streaming sector. Holdings of the SUBZ ETF include heavy hitters such as Netflix, Walt Disney, Roku (NASDAQ:ROKU) and Spotify (NYSE:SPOT).
In addition to streaming services that focus on movies and television, the Roundhill Streaming ETF also invests in companies that are involved in podcasts, such as Spotify as well as China’s Tencent Music. This makes sense given the ways in which podcasts have disrupted traditional radio.
Year-to-date, the SUBZ ETF is down, but most of that decline has come in recent weeks as investors rotate out of technology stocks that comprise the bulk of its holdings. Going forward, the share price should rebound strongly. Streaming, after all, is the future of entertainment. There’s no going back at this point.
On the date of publication, Joel Baglole held long positions in BTCC.U, APPL and DIS.