February 2021 ETF Pick
Updated: Mar 7, 2021
We have done a few stock picks before, but for this article I want to talk about Exchange Traded Funds (ETF). In case you did not know, ETFs are investment funds that compile of many stocks specific to one industry. This article will showcase two ETFs that I think will do well this month and the months that follow.
ETFMG Prime Cyber Security ETF (HACK)
HACK is an ETF that covers the cyber security industry. It consists of FireEye, Cisco, CommVault Systems, and many other companies in the cybersecurity field.
From early 2020 to now, HACK has had a 66% increase in value since the start of last year. The fund has been growing steadily throughout last and this year, and it is likely that it will continue to grow.
I believe HACK has potential of the increasing amounts of cybersecurity issues that come with increased dependence on technology. Consumers in the tech market will continue to be dependent on cybersecurity companies to provide protection from hacks and viruses. Due to this, it is very likely that the fund will continue to perform very well in the future.
Financial Sector SPDR Fund (XLF)
XLF is an ETF that covers the financial industry. It contains banks, including Bank of America and JP Morgan Chase, as well as other financial institutions, such as the investment company Berkshire Hathaway.
During the start of 2020, XLF saw a nearly 40% plunge in value because of COVID-19. However, it was able to regain all of its losses over the course of 2020 and early 2021.
My reasoning for why XLF has the ability to perform well comes both past and present data.
During the Great Recession, the financial sector took a similar plunge like the one that has occurred this year, but it was able to make a recovery and grew over the next few years. This means that it is likely that XLF will make a comeback and grow in value in the next few years.
More recently, financial institutions, like Morgan Stanley, have been beating earning expectations. In addition to this, new stimulus bills, PPP legislations, and the gradual reopening of the US gives banks new opportunities to make money. With this in mind, it looks very likely that XLF's value will continue to increase.
Before I end this article, I just wanted to say that if you are considering buying some of these ETFs, trade at your own risk. I recommend doing further research before buying any of these funds.
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