Eight ETFs with Staggering Returns in 2020
If only I put my money in these at the beginning of last year…
To say that the stock market performed surprisingly well in 2020 would be an understatement. For the major indices, this translated to the Dow rising by 7.3%, the S&P 16.3%, and the Nasdaq an impressive 43.6% to finish out the year.
Simply put, if you had just put your money in some index funds at the beginning of the year and left your account until the end of the year, you would have been well rewarded for not panic selling during the crash from February to April. Unfortunately, I was one of those panic sellers. That initial loss drove me to learn as much as I could to be profitable in the stock market. Thanks to the bull market that ensued and many, many trades later, I was able to close out the year with a 50% annual return.
But enough about me. You came to learn about the ETFs that would have had you beating the major indices. Here they are in order of annual percentage return during 2020.
ARK Invest ETFs
Founded in 2014, ARK Invest offers five “actively managed innovation ETFs” and boasts $17 billion in managed assets. For example, ARKK’s biggest holding at 10.95% (at time of writing) is Tesla. With shares valued at $729.77, this amounts to a nearly two billion dollar position. It also helps that Tesla surged 740% this year.
All five of ARK’s actively managed innovation ETFs have managed over 100% annual returns this year.
ARKQ: ARK Autonomous Technology & Robotics ETF
- Annual percentage return in 2020: 107.49%
- Dividend: 0.44% annually
- 01/04/21 trading price: $76.84
- Top holdings: Tesla, Materialise NV, Trimble, John Deere, JD.com, Alphabet, Kratos Defense & Security, Baidu, Flir Systems, Iridium Communications
ARKF: ARK Fintech Innovation ETF
- Annual percentage return in 2020: 107.64%
- Dividend: 0.29% annually
- 01/04/21 trading price: $49.30
- Top holdings: Square, Mercadolibre, Zillow, Intercontinental Exchange, Tencent Holdings, Pinterest, Paypal, Adyen, Sea Limited, Alibaba Group
ARKK: ARK Innovation ETF
- Annual percentage return in 2020: 157.73%
- Dividend: 0.07% annually
- Current trading price: $124.69
- Top holdings: Tesla, Roku, CRISPR Therapeutics, Square, Teladoc Health, Invitae, Zillow Group, Pure Storage, Editas Medicine, Proto Labs
ARKW: ARK Next Generation Internet ETF
- Annual percentage return in 2020: 159.12%
- Dividend: 0.08% annually
- 01/04/21 trading price: $145.77
- Top holdings: Tesla, Roku, Square, Grayscale Bitcoin Trust, Teladoc Health, Spotify, Pure Storage, Tencent Holdings, Facebook, Netflix
ARKG: ARK Genomic Revolution ETF
- Annual percentage return in 2020: 185.53%
- Dividend: 0.10% annually
- 01/04/21 trading price: $93.14
- Top holdings: Pacific Biosciences of California, Teladoc Health, CRISPR Therapeutics, Twist Bioscience, Caredx, Iovance, Invitae, Exact Sciences, Fate Therapeutics, Regeneron Pharmaceuticals
You can see that there’s some overlap between the different funds and their positions. Many of these companies have used their explosive growth to fund efforts in other sometimes unrelated sectors. ARK has had an extremely impressive year with all five of these categories. Time will tell how 2021 works for them.
LIT: Global X Lithium & Battery Tech ETF
LIT boasts a 4 star Morningstar rating and holds nearly $2 billion in assets. As of November 30, 2020, 43.3% of their assets are based in China.
- Annual percentage return in 2020: 124.64%
- Dividend: 0.40% biannually
- 01/04/21 trading price: $66.30
- Top holdings: Albemarle, Ganfeng Lithium, Tesla, Contemporary Amperex Technology, BYD Company, Samsung, Eve Energy, Panasonic, LG Chem, Yunnan Energy
ICLN: iShares Global Clean Energy ETF
According to their website, this ETF “seeks to track the investment results of an index composed of global equities in the clean energy sector.” Although ICLN saw very little action from 2016–2018, it has since seen near exponential growth in 2020. With world leaders championing clean energy and more businesses proving the viability of working towards these goals, I believe ICLN is just getting started when it comes to growth.
- Annual percentage return in 2020: 141.24%
- Dividend: 0.29% biannually
- 01/04/21 trading price: $28.85
- Top holdings: Plug Power, Enphase Energy, Meridian Energy, Xinyi Solar, Verbund, Siemens Gamesa Renewable Energy, Vestas Wind Systems, Contact Energy, Orsted, First Solar
TAN: Invesco Solar ETF
Another clean energy ETF, TAN is based on the MAC Global Solar Energy Index and invests at least 90% of its total assets in those securities.
- Annual percentage return in 2020: 237.63%
- Dividend: 0.09% annually
- 01/04/21 trading price: $105.78
- Holdings according to the MAC Global Solar Energy Index: Enphase Energy, SolarEdge Technologies, Xinyi Solar, Sunrun, First Solar, Scatec Solar, Daqo New Energy, Hannon Armstrong
Things to Consider
For those of you who looked up some of the individual companies in these ETFs, you may have seen that some of their annual returns were many times that of the ETF. For me, there are three key advantages to investing in ETFs over individual stocks:
- By nature, ETFs represent a collection of individual securities (that can be stocks). Investing in ETFs is often an easy way to diversify your positions.
- ETFs are managed (though not as much as mutual funds) so you get the benefit of investing in the expertise of the individuals responsible for the performance of the security.
- Most ETFs pay dividends. According to Fidelity, “if a stock is held in an ETF and that stock pays a dividend, then so does the ETF.” It’s always nice to receive an extra payment here and there. For extra growth, you can easily reinvest your dividends if you enable DRIP.
When I first started investing, I scoffed at the idea of investing in an ETF. I believed in individual companies and wanted to have higher stakes with them. However, over time, I realized how hard it is for me to beat the market.
I currently have positions in all of these tickers as well as individual stocks of my choosing, and I am looking to increase my positions for the long term. Let me know what your thoughts are on these ETFs and if there are any that I missed!
