2020 was a great year for the stock market and the ETF industry, as stocks, particularly in certain areas, surged even as the pandemic ravaged the economy. The Dow gained 7.3% last year, the S&P returned 16.3%, while the Nasdaq soared 43.6%, its best annual performance since 2009.
Tech was the best performing sector again, with a gain of 39%, while Energy was the worst, down 37%. Looking at the top performing areas of the market, there are three clear themes.
Solar and clean energy ETFs were the top performers last year as well, after a spectacular performance in 2019. The cost of renewable energy generation has been falling in recent years with continued technological innovation, making it more competitive. Joe Biden’s victory has further boosted these stocks as he has pledged to spend $2 trillion to combat climate change.
The Invesco Solar ETF (
TAN
) soared 235% while the Invesco WilderHill Clean Energy ETF (
PBW
) and the First Trust NASDAQ Clean Edge Green Energy Index Fund (
QCLN
) gained 205% and 184% respectively.
Three ARK ETFs—the ARK Genomic Revolution ETF (
ARKG
), the ARK Innovation ETF (
ARKK
) and the ARK Next Generation Internet ETF (
ARKW
)—were among the top ten best performing ETFs of 2020. They surged more than 150%. Cathie Wood has been a long-time bull on Tesla (
TSLA
), which is the top holding in ARKK and ARKW.
Areas like e-commerce and cloud computing were among the biggest beneficiaries of the trends driven by the pandemic. The Amplify Online Retail ETF (
IBUY
) and the WisdomTree Cloud Computing Fund (
WCLD
) gained 124% and 110% respectively.
Please watch the short video above to learn more about these ETFs.
(In full disclosure, Neena owns shares of IBUY and WCLD in the ETF Investor Portfolio.)
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