What are the best ETFs to watch?
ETFs are a favourite among many traders and investors because they enable you to get exposure to a broad range of assets without having to hold multiple positions. We’ve outlined some of the ETFs to watch.
ETFs: what you need to know
Despite Covid-19 causing major uncertainty during the course of 2020, it has been a record year for global ETFs – which attracted inflows in excess of $659 billion since January 2020.1 Events that caused the massive influx include the progress made on a Covid vaccine and Biden’s presidential victory.
Though it’s impossible to predict what might happen in 2021, we can identify some of the best performing ETFs to determine which of those to put on a watchlist. So, we’ve lined up top ETFs to watch in each of the following categories: technology, commodities, dividend-paying, international, US, UK, green and energy. Note that these are not necessarily the best ETFs to watch, but they are some of the most popular funds in each sector.
Get all the details you need on ETFs and find out how to trade them
How to buy or sell the best ETFs
Create and fund your account
Opening an account with us takes just a few minutes, and can fund the account via bank transfer, debit and credit card or PayPal. Once you have an account, you can choose to deal on our award-winning web platform,2 our on-the-go trading app, or MT4 – which is for the more advanced trader. Our platforms can all be tailored to suit your trading style and preferences, with personalised alerts, interactive charts and risk management tools.
Research the ETF
Before trading or investing in an ETF, make sure you choose the fund that best suits your needs. Always thoroughly research the ETFs you are interested in and create a sound trading plan before you open your first position. We offer a variety of tools to help you analyse the markets and create a risk management strategy.
Decide whether to trade or invest
You can trade ETFs via CFDs, or invest via our share trading service. When you trade an ETF, you can take advantage of markets that decline in price (known as going short, or short-selling), as well as those that increase (known as going long). If you decide to invest in an ETF – ie buy it – you can only profit if the price goes up.
Open and monitor your position
Log in to your account to open your first position. You can look for the funds you’re interested in using the search panel. Any running profits or losses will move in line with the ETF’s price, and your final profit/loss will be realised when you close your position or sell your ETF.
Tech ETFs to watch
Tech ETFs are a popular choice among traders and investors due to the list of companies that operate in this sector, including Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Alphabet (GOOGL). Tech ETFs don’t only track the performance of some of these big-name stocks, but also the tech sector as a whole.
Some of the best tech ETFs to watch in 2021 include:
- Technology Select Sector SPDR Fund (XLK): represents the tech sector of the S&P 500, enabling exposure to companies that specialise in tech hardware, software, storage, IT services, communications equipment and more
- Vanguard Information Technology ETF (VGT): tracks an index consisting of small-, mid- and large-cap companies that work in the IT sector
- Global X Funds – Global X Cloud Computing ETF (CLOU): invests in companies whose main business is in cloud computing, including Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS)
- Emerging Markets Internet & Ecommerce UCITS ETF (EMQQ): represents an index of internet and e-commerce companies, such as online retailers, social networks and online payment systems that serve developing markets
- KraneShares CSI China Internet ETF (KWEB): tracks a market-cap weighted index of China-based companies that deal with the internet as a whole and internet-related technology
Commodity ETFs to watch
Commodity ETFs are designed to track the price of either a single commodity, for example gold, or a diversified basket of commodities. They offer a means of trading or investing without having to deal with the physical assets themselves – so you won’t have to take delivery of or store any commodities.
Oil ETFs
Oil is a sought-after commodity among traders and investors due to its high liquidity and its connection to the wider economy. By trading or investing in an oil ETF, you can get exposure to oil without direct involvement in the market. Oil ETFs can include companies in the oil and gas sector, or those that invest in the commodity itself.
Some of the best oil ETFs to watch in 2021 include:
- WisdomTree Brent Crude Oil (BRNT): tracks the Bloomberg Brent Crude Subindex, giving you exposure to price movements of the most popular oil benchmark in the world
- United States Oil Fund LP (USO): follows the daily percentage price changes of West Texas Intermediate oil, or WTI
- ProShares Ultra Bloomberg Crude Oil (UCO): traces the Bloomberg WTI Crude Oil index, but aims to double its daily movements
- ProShares UltraShort Bloomberg Crude Oil (SCO): seeks to double the inverse daily performance of the Bloomberg WTI Crude Oil index
- Energy Select Sector SPDR Fund (XLE): tracks an index that includes large-cap companies involved in oil and gas, as well as energy equipment
Gold ETFs
Trading gold is often popular as a form of insurance, as the metal is considered a safe haven in times of financial turbulence. Gold ETFs either derive their value from holding underlying assets that are backed by physical gold, have exposure to gold futures, or are comprised of investments in the companies that mine the precious metal.
Some of the best gold ETFs to watch in 2021 include:
- SPDR Gold Shares (2840): provided by an advisory that holds gold bars with the aim of tracking the performance of gold bullion
- Invesco Physical Gold ETC (SGLP): tracks the movements in the London Gold Market Fixing Ltd PM Fix Price in US dollars, underpinned by its holdings of gold bullion
- Sprott Gold Miners ETF (SGDM): follows the performance of an index that holds a group of mining companies listed in the US and Canada
- iShares MSCI Global Gold Miners ETF (RING): tracks the performance of a group of mining companies from around the world
- iShares Gold Producers UCITS ETF (SPGPG): seeks to replicate the performance of the S&P Commodity Producers Gold Index
Silver ETFs to watch
Silver trading, much like gold, is attractive due to its association with global currencies and the fact that it’s relatively volatile. Silver ETFs often have a lower cost of entry than gold ETFs, with the potential for favourable returns due to its reputation as a safe-haven commodity.
Some of the best silver ETFs to watch in 2021 include:
- iShares Silver Trust (SLV): tracks the daily movements of silver bullion enabling direct exposure to the precious metal without owning physical silver
- ProShares Ultra Silver (AGQ): does not invest directly in silver – instead, follows the day-to-day performance of the Bloomberg Silver SubindexSM and invests based on this benchmark
- ProShares UltraShort Silver (ZSL): tracks the daily performance of silver bullion in USD and aims to return two times the inverse by investing in this benchmark
- Aberdeen Standard Physical Silver Shares ETF (SIVR): tracks the silver spot price and aims to deliver equal returns
- Global X Silver Miners ETF (SIL): represents 40 companies involved in mining and mining operations
Dividend ETFs to watch
Dividend ETFs are funds that track a basket of stocks that pay high dividends across a wide range of sectors. If a company can maintain healthy dividends without sacrificing other areas of the business, its stock will generally perform well. Companies known to pay healthy dividends include 3M (MMM) and Nike Inc. (NKE).
Some of the best dividend ETFs to watch in 2021 include:
- Invesco S&P 500 Quality ETF (SPHQ): represents large-cap US growth stocks
- Vanguard High Dividend Yield ETF (VYM): tracks nearly 400 stocks as represented on the FTSE High Dividend Yield Index
- Vanguard Dividend Appreciation ETF (VIG): tracks over 200 large-cap growth stocks
- WisdomTree Global ex-US Quality Dividend Growth Fund (DNL): follows an index that represents large-cap dividend-paying stocks in emerging and developed markets
- iShares Select Dividend Index (DVY): tracks an index of about 100 US stocks that have a solid five-year dividend-paying record
International ETFs to watch
International ETFs are often used to diversify investments, as these funds specialise in foreign instruments – scattered across different geographic and political regions. These ETFs enable investors to get exposure to a variety of territories and several asset classes with one investment.
You can invest in international ETFs using our share dealing service. Alternatively, you can trade these ETFs using our derivative products.
Some of the best international ETFs to watch in 2021 include:
- Vanguard Total International Stock ETF (VXUS): invests in global stocks (excluding US) listed on the FTSE Global All Cap Index
- Vanguard FTSE All-World ex-US ETF (VEU): follows an index that tracks the performance of stocks in developed and emerging markets
- Vanguard FTSE Europe ETF (VGK): tracks a benchmark index that measures the performance of stocks in the major markets of Europe
- Schwab Emerging Markets Equity ETF (SCHE): invests most of its assets in the stocks that make up the FTSE Emerging Index, which includes mid- and large-cap companies in emerging markets
US ETFs to watch
US ETFs enable you to get broad exposure to the American stock market, at a lower cost and with just one position. Many US ETFs track major and mid-sized American indices, as well as popular dividend or growth stocks.
Some of the best US ETFs to watch in 2021 include:
- iShares Dow Jones Industrial Average UCITS ETF (CIND): offers exposure to 30 different US industrial companies (excluding transport and utilities)
- iShares MSCI USA UCITS ETF (CSUS): tracks the performance of an index that gives broader exposure to US stocks, some of which are listed on the NYSE and NASDAQ
- Lyxor Core Morningstar US (DR) UCITS ETF (LCUD): tracks the performance of an index that represents mid- and large-cap companies within the US equity market
- JPMorgan BetaBuilders US Equity ETF (BBUS): offers exposure to some of the largest listed companies in the US by market cap
- db x-trackers S&P 500 UCITS ETF 1C (XXSPXSPX): reflects the performance of the shares of 500 companies across all major US industries
UK ETFs to watch
The UK is home to a range of major indices and top stocks, which is why so many traders and investors choose UK ETFs. It gives them access to a diverse range of markets and asset classes without the risk of having multiple positions or investments.
Some of the best UK ETFs to watch in 2021 include:
- iShares MSCI United Kingdom ETF (EWU): follows an underlying index of large- and mid-cap companies listed on the London Stock Exchange
- iShares Core FTSE 100 UCITS ETF (ISFD): aims to track the performance of the FTSE 100 – the 100 largest listed companies in the UK by market cap
- Vanguard FTSE 250 UCITS ETF (VMIG): seeks to track the performance of the FTSE 250 – the 250 largest listed companies by market cap after those of the FTSE 100
- Invesco CurrencyShares British Pound Sterling Trust (FXB): tracks the price of sterling, giving you exposure to the GBP without having to own any physical currency
- SPDR Blackstone GSO Senior Loan ETF (SRLN): invests in senior loans, which pay an interest at either a floating or adjusted rate
Green ETFs to watch
The global interest in green energy is on the rise, increasing the demand for green solutions and stocks linked to these innovations. Green ETFs offer broad exposure to the different stocks involved in clean energy.
Some of the best green ETFs to watch in 2021 include:
- First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN): tracks the performance of an index made up of small-, mid- and large-cap clean energy companies in the United States
- Invesco WilderHill Clean Energy Portfolio (PBW): represents an index composed of US stocks that focus on the advancement of green energy and conservation
- Invesco Solar ETF (TAN): holds a portfolio of companies involved specifically in the solar energy industry, including solar tech, raw materials, installation and more
- iShares Global Clean Energy ETF (ICLN): offers exposure to companies that produce energy from solar, wind, and other renewable sources
- ALPS Clean Energy ETF (ACES): tracks US and Canadian companies that deal with renewable energy and clean technology
Energy ETFs to watch
Even though there has been an increase in cleaner energy solutions, traditional energy markets remain crucial to the functioning of the wider economy. When you trade or invest in energy ETFs, you could get exposure to the broader energy market with a single position, which includes commodities such as oil.
Some of the best energy ETFs to watch in 2021 include:
- Energy Select Sector SPDR Fund (XLE): aims to represent the performance of energy stocks listed on the S&P 500
- Vanguard Energy ETF (VDE): tracks a benchmark index that measures the performance of companies involved in the exploration and production of oil, natural gas and coal
- Fidelity MSCI Energy Index ETF (FENY): linked to the performance of the MSCI USA IMI Energy 25/50 Index, which represents US energy stocks
- Amundi MSCI World Energy UCITS ETF (WDNR): offers exposure to more than 100 global energy stocks
- Alerian MLP ETF (AMLP): tracks an index of stocks in the US energy infrastructure sector
Robo investing and IG Smart Portfolios
You can let our experts invest in ETFs on your behalf with an IG Smart Portfolio. This is done via robo-investing, which is the use of an online platform to access a diversified investment portfolio, managed by a robo-advisor. It is seen as an easy way to get exposure to a low cost, ready-made portfolio. You simply answer a few questions about your investment preferences and the robo-advisor will build your portfolio – based on your needs – to target different amounts of investment risk.
Get started with IG Smart Portfolios
Trading index futures
While ETFs are a popular way of getting exposure to major indices, you can also get exposure to their price movements via index futures. Indices are a highly liquid market to trade and, with more trading hours than most other markets, you can receive longer exposure to potential opportunities. When trading with us, you’ll use CFDs to take advantage of index price movements.
Best ETFs to watch in 2021 summed up
- Global ETFs attracted inflows in excess of $659 billion in 2020
- Tech ETFs track a collection of technology companies such as Apple, Microsoft, and Google
- Commodity ETFs track the price of either a single commodity or a diversified basket of commodities – oil and gold ETFs are some of the most popular
- Dividend ETFs track a basket of stocks that pay high dividends across a wide range of sectors
- International ETFs are often used to diversify investments across different geographic and political regions, enabling you to get wider exposure
- US ETFs enable you to get broad exposure to the American stock market with just one position
- UK ETFs give access to a range of major UK indices and top stocks without having multiple positions or investments
- Green ETFs offer broad exposure to the different stocks that cover clean energy solutions
- Energy ETFs offer exposure to the broader energy market, including oil, coal and gas, as well as energy infrastructure
- You can choose to trade ETFs via CFDs, or invest via our share trading service
- Alternatively, you can let our experts invest in ETFs on your behalf with an IG Smart Portfolio
1 Financial Times, 2020
2 As awarded at the ADVFN International Financial Awards 2020 and Professional Trader Awards 2019
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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