ETF Traits CEO Tom Lydon had a lot to share on the TD Ameritrade Community with host Nicole Petallides when requested in regards to the ARK Innovation ETF (ARKK).
As Lydon explains, many thought that tech was dropping its luster earlier within the 12 months. Nevertheless, the 10-year Treasury charge just lately dipped again under 1.3%, which was nice for development shares. On high of that, the current government order issued by President Biden was a terrific transfer for progressive know-how.
Lydon provides: “Once you search for firms that is perhaps the following FAANG shares, there are some thematic ETFs on the market, proper throughout the board, which might be very progressive and now, with the federal government getting behind innovation, competitors, know-how, and development, I believe we’ll see increasingly more cash flowing into these thematic methods, which not solely do Cathie Wooden and her crew at ARK have, however are proper throughout the board as an entire.”
It is also essential to notice that the ETF market will hit over $1 trillion in new property this 12 months. “Fastened revenue was the large focus final 12 months,” Lydon continues. “This 12 months, it’s about fairness.”
Three massive themes for Lydon are the low value, the diversification, and the tax effectivity of ETFs. There’s nonetheless more cash in mutual funds right now. Nevertheless, there’s additionally $5 trillion in cash market funds. Finally, that may discover someplace to go, and that is unlikely within the bond market on account of rising rates of interest.
“What I believe we’ll see is the dominance of the S&P 500 begin to wane as these giant cap shares have an enormous weighting within the S&P. Plus, the federal government that has been concentrating on these massive firms from a monopoly standpoint – it is essential to know there’s competitors within the U.S., but in addition China. One factor President Biden stated in his infrastructure invoice is that we now have to search out methods to compete abroad.”
What About Commodities?
With inflation being a significant concern for advisors, it does not matter what the messaging is from the Fed: traders have to be steered in the best path. Inflation might be poisonous for portfolios.
“It is essential to put money into areas like agriculture, power, and metals. Sadly, gold has been the worst-performing commodity up to now 12 months,” Lydon provides.
With that in thoughts, there are a number of ETFs to think about on this house, together with the Invesco DB Optimum Yield Diversified Commodity Technique No Ok-1 ETF (PDBC). Plus, as gold tends to be a second-half participant, the SPDR Gold Shares ETF (GLD), the biggest gold ETF in existence, should be a great place to look. Regardless of the dear metallic headwinds, GLD has nonetheless made $eight billion to this point this 12 months.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.