I can’t believe one year passed already. I feel like I wrote yesterday the best ETFs buy for 2016.
Time fly… literally. And money too 🙂
How was your 2016 in term of financial prosperity and richnesses of life?
I’m sure you did great, Pal. If not, don’t worry, 2017 is going to be your year.
I honestly couldn’t be more excited to trudge forward this year with all the opportunities out there.
The reason is simple, 2017 expectation in the financial markets are very high after Trump won the election in U.S. In my humble opinion, till the second quarter of this year things will go smoothly, but after, we’ll have to see.
Before rolling out my best ETFs prediction for this year, let’s have a look how the ETFs I invested in last year did.
1) SPDR S&P Metals and Mining ETF + 106%
Great ETFs tracking thousands of companies in metal and metal sector. The year started on the wrong foot for commodities, but in early February, commodities prices skyrocket.
So, come at no surprise that this ETFs returned little more than 100% in one year, costing you and me only 0.35% in fund fee.
2) Vanguard Energy ETF + 30%
Energy sector did well but not as expected. As you noticed, filling your car it’s about 20% more expensive than one year ago when oil was trading at a multi-decade low price touching US$ 37 per barrel at one point. Today, oil is trading at US$ 52.
I was surprised to see a so weak rebound, but considering that we are moving into a renewable energy era, this might be the norm.
3) IShares MSCI Hong Kong ETF + 16%
The fund returned double the average yearly fund return of 7.41%. That’s great.
4) Vanguard Health Care ETF – 3%
Ouch, health care didn’t perform last year. However, this sector is hot in the near future as the modern world population is aging fast. I’m also expecting a breakthrough in medical nanotechnology that will extend our life drastically, and by doing so, people will spend big money in this sector as baby boomers are the wealthiest group in the world.
5) Vanguard Total World Stock ETF + 8.5%
This ETFs did well following its yearly average. It’s a defensive investment; rarely it would let you down.
6) Global X Funds – Global X Lithium ETF (LIT) + 4%
This ETFs was a late addition to my portfolio in June 2016. So, take in consideration the gain was only for the last 6 months. I’m confident this sector will do great in the next 10 years thanks to electric cars boom.
So, 2016 was a great year returning a 25.5%. If you didn’t follow my tips, just imagine having invested US$ 100.000 in the above funds in equal amount, and you would have US$ 125.500 right now. No bad for a lazy investment as ETFs.
However, the past is past. Let’s have a look at what I’m working toward 2007…
TOP PICK ETFS FOR 2017
It’s time to think about your new portfolio with new sectors going to be very HOT!
I’m excited to share with you two sectors in particular which are set to go “explosive” this year after suffering a terrible downtrend for years: Uranium and Silver/Gold.
Let’s start with:
1# Global X Uranium ETF
The sector is very small, with Cameco and NexGen Energy making 33% of this ETFs.
Now, the good thing is the Uranium sector as a whole and this ETF just broke out from a very longggggg downtrend. To be exact, from 2011 when Fukushima nuclear disaster happened.
During these 5 years, many uranium miners went belly up. As a result, I expect in the next three years to witness a serious shortage of uranium. Consequently, uranium price will skyrocket.
I’m not the only investor being so bullish on Uranium. Taki from InvestingHeaven.com and NextBigTrade.com are confirming my thoughts. I highly respect the work of these two guys, you should considering follow them.
Global X Uranium ETF is fairly liquid with an average daily trading volume of 255.000 shares with a total asset of $126 million under management.
The Fund offers a generous dividend yield of 7.13%, but who cares about yield when there is a potential of 500% gains in the next few years.
The ETF has lost 900% in five years which is a great sign that the sector is been oversold -BIG times. This is the reason I’m bullish to invest in this fund for the long-term; GREAT VALUE FOR MONEY.
The annual fees of 0.70% that is the norm for a niche ETFs
The world needs electricity, and with the introduction of electric cars, the demand is going to be exploding. Not only Uranium is the most efficient clean energy, but at the moment Uranium generates 20% of the world electricity.
Time to accumulate and hold till it triple in value before considering rebalancing your portfolio away from this sector.
NOTE; This ETF is highly volatile, not suitable for soft hearted investors.
2# VanEck Vectors Gold Miners ETF (GDX)
After a great start in 2016, this ETF start correcting in July till this month.
The good news is that gold is turning up again and the sector is going for a multi-year bull. I would not be surprised to see gold at 5.000 US$/OZ in 3 years time.
Yes, Pal, that is three times the current 1.200 US$/OZ.
VanEck Vectors Gold Miners ETF is a very liquid fund with a total asset of $10.5 billion under management.
The fund doesn’t have a yield as mining companies are recovering from a terrible downturn lasting 3 years. I don’t invest for yield, but for making serious gains.
However, it’s possible a short reversal before booming up. So, accumulate without going all in.
The annual fee is only at 0.52%.
The sector is heavily undervalued while exploration for gold is been weak in recent years, causing a possible shortage in the near future.
Time to accumulate and hold till it doubles in value before considering rebalancing your portfolio away from this sector.
3) SPDR S&P Metals and Mining ETF
I’m still bullish on this ETF even after surging 100% last year. Basic commodities have still a long way of appreciation ahead. Trump “wow” the world to rebuild America, so this ETF is very Trump’s friendly sort of.
SPDR S&P Metal and Mining ETF is liquid with an average daily trading volume of 2.3 million shares with a total asset of $855 million under management (more than double the size of last year.
The Fund dividend yield is a mere 1%.
The fund’s annual portfolio turnover ratio is high at 38% together with the annual fees of 0.35%.
I expect a rebalancing in commodities prices. China is shutting down uneconomical mines while trying to reduce its stockpiles of metals. Trump want to rebuild America while building a wall with Mexico.
Accumulate and hold.
IS MY INVESTMENT PLAN, RISKY?
Definitely less risky than driving in India.
As you notice already, I’m focusing on volatile sectors looking for big gains. In fact, I didn’t mention Vanguard Total World Stock ETF, Vanguard Health Care ETF and IShares MSCI Hong Kong ETF this year.
That doesn’t mean I consider these sectors underperforming in the next 10 years, in contrary I’m bullish. However, these ETFs are defensive while 2017 is a RISK ON year. Meaning, I expect excitement from investors splashing money in the markets while pushing stocks price higher (at least for the first half of the year).
I manage my risks, considering potential return VS potential loss. So, I don’t feel I’m risking more than a guy putting money regularly on S&P500, which in my humble opinion is overvalued.
Cheers to whatever the future holds, and to knowing that no matter what 2017 brings, we will be better off from the growth and lessons that occur.
DISCLOSURE: I’m not a financial advisor or have any qualification to give advice on investments. For that kind of services, visit the nearest bank or a financial advisor that will be happy to take a hefty fee and “pretending” to look after you and your money.