Top Performing Mutual Funds and ETFs for 2021
2021 has been an exceptional year for the stock market, with many mutual funds and exchange-traded funds (ETFs) delivering impressive returns. Investors looking to add some diversity to their portfolios can benefit from exploring these top performers.
Top Performing Mutual Funds for 2021
Here are some of the top-performing mutual funds of 2021:
1. Fidelity Select Semiconductors Portfolio (FSELX)
Fidelity Select Semiconductors Portfolio is a mutual fund that invests in companies in the semiconductor industry. The fund has had an exceptional year, with a year-to-date return of over 35%. This performance is due to the strong growth of the semiconductor industry, which has benefited from increased demand for electronics due to remote work and increased online activity during the pandemic.
2. T. Rowe Price Global Technology Fund (PRGTX)
T. Rowe Price Global Technology Fund is another mutual fund that has benefited from the growth of the technology sector. The fund invests in technology companies worldwide and has a year-to-date return of over 29%. With the increasing reliance on technology in various sectors of the economy, technology companies are expected to continue to experience growth, making this mutual fund a strong investment choice.
3. Vanguard Information Technology Index Fund (VITAX)
The Vanguard Information Technology Index Fund is an index mutual fund that tracks the performance of the technology sector. The fund has a year-to-date return of over 23%, thanks to the strong growth of technology companies in the stock market. With the continued reliance on technology, this mutual fund is expected to remain a strong performer in the years to come.
Top Performing ETFs for 2021
Here are some of the top-performing ETFs of 2021:
1. Global X Lithium & Battery Tech ETF (LIT)
The Global X Lithium & Battery Tech ETF invests in companies involved in the production of lithium and other materials used in battery production. With the increased demand for electric vehicles and other battery-powered technologies, this ETF has experienced significant growth, with a year-to-date return of over 54%.
2. VanEck Vectors Rare Earth/Strategic Metals ETF (REMX)
The VanEck Vectors Rare Earth/Strategic Metals ETF invests in companies involved in the production of rare earth and strategic metals. These metals are used in a variety of applications, including smartphones, hybrid cars, and wind turbines. With the increased demand for these technologies, this ETF has delivered a year-to-date return of over 47%.
3. Global X Video Games & Esports ETF (HERO)
The Global X Video Games & Esports ETF invests in companies involved in the video game and esports industry. With the increasing popularity of esports and the growing video game industry, this ETF has delivered a year-to-date return of over 35%. As the industry continues to grow, this ETF is expected to remain a strong performer.
Factors Contributing to the Success of these Funds and ETFs
Several factors have contributed to the success of these top-performing mutual funds and ETFs:
Strong Growth in the Technology Sector
The technology sector has seen strong growth in 2021, with many of the top-performing funds and ETF s having a significant allocation to this sector. The COVID-19 pandemic has accelerated the adoption of technology in various industries, and the shift to remote work and online transactions has driven the growth of many tech companies. Additionally, advancements in areas such as artificial intelligence, cloud computing, and cybersecurity have further fueled growth in the sector. As a result, funds and ETFs that have significant exposure to technology have outperformed the broader market in 2021.
Rising Demand for Sustainable and Socially Responsible Investing
Investors are increasingly interested in sustainable and socially responsible investing, which has led to strong growth in funds and ETFs focused on environmental, social, and governance (ESG) factors. The COVID-19 pandemic has also highlighted the importance of investing in companies with strong environmental, social, and governance practices. As a result, many ESG-focused funds and ETFs have outperformed the broader market in 2021.
Inflation Concerns
Investors are increasingly concerned about rising inflation and its impact on their portfolios. Inflation erodes the purchasing power of money, which can reduce the returns of fixed-income investments such as bonds. As a result, investors have been shifting their investments to funds and ETFs that have exposure to assets that can help protect against inflation, such as commodities, real estate, and certain stocks. Funds and ETFs with significant exposure to these assets have performed well in 2021.
Fiscal and Monetary Stimulus
The fiscal and monetary stimulus provided by governments and central banks in response to the COVID-19 pandemic has helped support the markets and boost the performance of many funds and ETFs. The stimulus measures have helped to stabilize the economy and provided support to businesses and individuals. Additionally, the low interest rate environment created by central banks has made it easier for companies to access capital and has increased demand for riskier assets such as stocks.
Conclusion
Investing in mutual funds and ETFs can be an effective way to build a diversified portfolio and achieve long-term financial goals. By considering a variety of asset classes and investment strategies, investors can create a portfolio that meets their individual needs and risk tolerance. While past performance is not a guarantee of future results, understanding the factors that contribute to the success of top-performing funds and ETFs can help investors make informed decisions about their investments.
