Buying ETFs (exchange traded fund) as opposed to regular stocks can help investors manage risk. An ETF tracks an index, sector, commodity, or another form of asset and can be bought and sold on any traditional platform. Buying an ETF for an industry rater than one stock in the industry is much safer. If that one company fails, your investment fails. But, if the industry does take off like you expected, the ETF will have you in full gear. The growing industries below are ones I believe have the potential to take off in the 1-3 years.
Aerospace – $XAR
When people hear Aerospace they think of spaceships and space hotels. There is much more to Aerospace than this. Aerospace has a wide functional opportunity as it is purposeful in military, industrial, and commercial aspects, which is what qualifies it to be one of the growing industries. This is not a small industry as it is valued at $838 billion, and has a wide range of companies. Boeing ($BA) and Airbus ($EADSY) are common names as they are responsible for most of the aircrafts and bus systems. The industry begins to draw me in though because of the new ideas that are soon to come.
e-VTOL stands for electric vertical takeoff and landing and these vehicles will be here before you know it. They are planning to be used by air taxis and will allow people to travel ideally city to city at a much faster speed. Uber ($UBER) had a division called Uber Elevate dedicated to this type of travel, but the pandemic forced them to sell to Joby Aviation. This kind of angle on commercial travel, as well as the goals of many such as Richard Branson to have commercial flights to space is what pulls me into Aerospace. If things like this can be accomplished, the commercial part of the industry alone will propel it higher.
$XAR is currently at $132.60, an All-Time High for the Aerospace ETF. The four major holdings of this ETF, are;
Axon Enterprises ($AXON), Maxar Technologies ($MAXR), Aerojet Rocketdyne Holdings ($AJRD), and Virgin Galactic Holdings ($SPCE).
Artificial Intelligence – $ARKQ
AI has been on the scene for awhile now, but its recent normalization is what attracts me to it. Self-driving cars are no longer a wild thought, and Artificial Intelligence has even been used to replace doctors in annual checkups. The use cases of AI does not stop there though, all the capabilities of it is very broad and why it is quickly taking over everyday life.
Everyone has experienced the odd feeling of talking about or looking at a product, then getting an ad for it. This is AI working, tracking what catches your eye and what doesn’t, then putting it in front of you. AI is also using machine learning to detect odd financial behavior by an individual and discovering fraud, well before any human could find it. These are two of the many examples of AI, and the broadness of these examples show you just how capable it is.
Cathie Wood is the genius behind Ark Investments, one of the best performing asset management companies in the past two year. Her Artificial Intelligence specific ETF ($ARKQ) has major holdings of Tesla ($TSLA), Trimble ($TRMB), and JD ($JD). In the past year ARKQ is up 68%, and has seen a high of $99.68. Currently it sits at $84.72
We have discussed the power of cryptocurrency plenty of times here, and I will link some of those articles below. Cryptocurrency can be a game changer for data verification and the transfer of information. Analysts have said the strides cryptocurrency has made in the past five years will be trumped by its strides the next two years. Sounds like one of the best growing industries to me!
Grayscale is a cryptocurrency specific asset management firm, and $GBTC is their crypto large cap ETF. The contents of this ETF are Bitcoin, Ethereum, Cardano, Chainlink, Litecoin, and Bitcoin Cash. Grayscale holds 46% of all the Bitcoin that is held by publicly traded companies. So if $35,000 is a little too much for you to buy a bitcoin, buy some shares of $GBTC instead.
$GBTC sits at $28.58, and is considered to be at a 9% discount to its fair price according to MarketWatch. The ETF reached a high of $56.70 back in February, and can very well return there before year end. Grayscale added Cardano to this fund yesterday, and made it the third largest holding of it behind Bitcoin and Ethereum.