January 22, 2021
By: David Dierking
For most of the world in 2020, the coronavirus pandemic turned lives upside down. For internet stocks, it actually provided a boost. Trends that have been developing for years, such as the growth of online retail and internet communications applications, experienced a sudden acceleration in demand, making internet stocks among the year’s best performers.
The outlook for 2021 is still up in the air because we don’t know for sure if the narrative will be dominated by continued restrictions related to the COVID-19 outbreak or by a vaccine-fueled global economic recovery.
Either way, the internet sector looks primed to benefit. Whether gaming from home, working from home or shopping from home, the internet has become a crucial part of our day-to-day lives.
Internet ETFs posted gains as high as 100% in 2020. While it’s probably unrealistic to expect that kind of return again, the enthusiasm for internet stocks, in general, could produce further gains in 2021.
Here are my top 7 internet ETFs that investors should consider for the coming year.
First Trust Dow Jones Internet Index ETF (FDN)
The largest internet ETF on this list, FDN targets companies that generate a majority of their revenues from the internet and ultimately produces a portfolio of 15 internet commerce and 25 internet services names.
Despite its popularity, it’s been a relatively modest performer within its peer group, returning “only” 54% this year.
ARK Next Generation Internet ETF (ARKW)
ARK has undoubtedly been the ETF industry success story. All of its “name brand” ETFs are up more than 100% this year on the strength of its active management strategies.
ARKW is one of the best performers within this elite group and targets next-gen internet themes, including cloud computing, blockchain, artificial intelligence, big data and e-commerce.
It’s currently up 160% year-to-date.
Invesco Nasdaq Internet ETF (PNQI)
For simple, broad-based internet industry exposure, PNQI is a nice option. It contains all of the biggest internet-related services companies and skews heavily towards mega-cap names, including Amazon, Facebook, Alibaba, Netflix and Google.
PNQI comes with only an average expense ratio and has returned just over 60%.
Emerging Markets Internet & E-Commerce ETF (EMQQ)
EMQQ has a similar internet and online commerce focus as the other names on this list, but takes its focus overseas offering exposure to internet and e-commerce growth in technologically underdeveloped areas of the world.
If the global recovery story remains intact, EMQQ could be positioned nicely benefiting from both a cyclical rebound and a falling dollar.
O’Shares Global Internet Giants ETF (OGIG)
You’ll recognize the name in charge of this fund if you’re a fan of Shark Tank. Kevin O’Leary’s fund provider focuses on the largest of large-caps and OGIG consists of around 60 high quality names from around the world.
OGIG is one of the cheaper offerings in this space with an expense ratio of 0.48% and is up more than 110% in 2020.
KraneShares CSI China Internet ETF (KWEB)
The China-focused version of the other funds on this list, KWEB provides access to Chinese internet companies that offer similar services as Google, Facebook, Twitter, eBay and Amazon.
KWEB has been very popular among investors seeking higher-powered growth potential from the internet space. It’s gained about 60% this year.
SPDR S&P Internet ETF (XWEB)
XWEB is a surprisingly small fund given its link to State Street, but that doesn’t mean it isn’t an intriguing option. This is one of the few to focus on companies of all sizes and is the cheapest offering in this group.
It’s been one of the leading performers this year, gaining nearly 100%.
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