I, like everyone else, thank the Nasdaq 100 ETF, the Invesco QQQ Trust (Nasdaq:QQQ), for its duty in 2020.
In a time when the market needed a leader, the “Qubes” took the reins and ran.
Names like Amazon.com Inc. (Nasdaq:AMZN), Netflix Inc. (Nasdaq:NFLX), Facebook Inc. (Nasdaq:FB), and Alphabet Inc. (Nasdaq:GOOGL) got daily mention everywhere as one of the reasons that investors and traders needed to stay in the market.
The FAANG stocks shouldered some serious weight. But this group is seriously tired…
And there’s a better technology group that you need to ride in 2021.
The group in question, in fact, doubled the performance of the Nasdaq over the course of 2020. While tech stocks grew about 45%, these names shot up 147%.
And they’re just getting started.
This group makes up my top exchange-traded fund (ETF) pick for 2021. Here’s how to play it…
Clean Energy: The FAANG of the Future
The clean energy movement has become more than just a movement. It’s now a mainstream investment sector that just got another boost in the arm.
Most of us remember the first run for alternative energy stocks. They soared and were the darlings of the market years ago, only to crash. The technology simply hadn’t caught up with the concept just yet. But that’s changed now. New technology is now cutting edge and making the concept of clean energy a reality.
The political landscape is also providing a familiar tailwind to this sector again, especially after a Democratic win in Georgia.
Last year, one of the biggest complaints about the alternative energy group was that the incentive to adopt clean energy initiatives would fade. But I think we’ve heard the last of that for a while, as the incoming administration has a clear mandate to continue to invest in the concept as it grows quickly.
This indicates that the sector has moved into the acceptance phase of its growth cycle, and it’s quickly becoming one of the most powerful waves that investors can ride. But how?
Well, that brings me to my top ETF pick of 2021: the iShares Global Clean Energy ETF (Nasdaq: ICLN). This is one of the best ways to cash in on the alternative energy trend.
The ICLN invests in more than three dozen companies from around the world. Well-known companies like Enphase Energy Inc. (Nasdaq:ENPH) and Plug Power Inc. (Nasdaq:PLUG) top the holdings list. You may be thinking, “well-known? Most people haven’t heard of those companies.”
But that’s the point. Imagine if you had invested in a company like Apple Inc. (Nasdaq:AAPL) before it became a household name. Before Steve Jobs had a movie made about him. Before everyone you know owned an iPhone.
The Nasdaq 100 heavy lifters are about as well-known as it gets because they’ve already moved through the acceptance phase that generates real investment growth. As I said before, the clean energy stocks just entered the acceptance phase.
Volatility for the ICLN has been lower than that of the Nasdaq 100 over the last year. That’s right, the speculative clean energy shares have been less volatile than the large-cap tech stocks. While volatility for the ICLN has been on the rise lately, it’s being caused by upside movement, not selloffs.
Currently, 80% of ICLN shares are trading in a bull market trend, which is comparable to the Nasdaq 100’s 82% reading of the same breadth indicator.
Return and relative strength, however, are a completely different story.
The QQQ boasts a return of 9% since the beginning of November, while the ICLN shares are up 47.3% for the same period. Over the last year, the returns are 45% and 147%, respectively. Get used to that differential as we head into 2021, because it’s going to continue.
Now, for the kicker – here’s how to trade ICLN in your portfolio.
The bonus facet of this ETF is that both traders and investors will love its activity through 2021, as this ETF offers a “trending trading range.”
What I mean by that is that the ETF trades in an upward trend of continuous new highs followed by short corrections. This allows traders to effectively time the ICLN, which generates higher returns for the year.
In fact, I just sent my Strikepoint Tradersubscribers an option trade recommendation on ICLN with profit potential of 100% within a week. To learn how you can check out the details of that trade, just click here.
At the same time, investors will love the shares because of the strong long-term trend. This means that you can buy and hold the ETF through 2021 for some impressive returns. Expect some bumps in the road, but the long-term results should outpace the broader market.
There you have it, my number one ETF pick for the New Year.
Until next time,