Exchange-traded funds (ETFs) continue to grow in popularity. 2022 is expected to be a record-setting year for ETFs, with more launches and higher fund flows than last year. Data from the New York Stock Exchange suggests that, as of Sep. 30, 2021, there were almost 2,700 ETFs available stateside with $6.7 trillion under management. Meanwhile, in 2021, over 1,500 new ETFs were launched worldwide.
ETFs have become popular among investors due to their relatively low fees, liquidity, tax efficiency as well as transparency. In addition, they offer investors an opportunity to diversify portfolios and gain exposure to a wide range of asset classes, themes, and countries.
In 2022, we could see more investors flock toward actively-managed ETFs to better cope with volatility and increased downside risk. In light of overstretched valuations and rising inflation, analysts suggest combining quality and value to better navigate the current uncertain terrain in equity markets.
We should remind InvestorPlace.com readers that these funds new and small. As they do not have much trading history, further due diligence would be necessary before investing in them.
With that information, here are three new ETFs to put on your January buy list:
- The Gen Z ETF (NASDAQ:ZGEN)
- Motley Fool Next Index ETF (NYSEARCA:TMFX)
- VegTech Plant-based Innovation & Climate ETF (NYSEARCA:EATV)
New ETFs: The Gen Z ETF (ZGEN)
Expense Ratio: 0.60% per year
Recent research suggests, “Members of Gen Z — loosely, people born from 1995 to 2010 — are true digital natives: from earliest youth, they have been exposed to the internet, to social networks, and to mobile systems.” In addition to technology, these young members of the society typically value environmental issues, diversity, and wellness of the body and the mind. In 2020, about 10% of American voters were part of Gen Z.
As these consumers enter different segments of the society, companies are looking for ways to better appreciate their spending habits. Our first fund, The Gen Z ETF, provides exposure to these young consumers, “projected to be the highest-earning generation in less than ten years, earning over $40 trillion annually.”
This actively-managed fund was launched in December 2021. The leading 10 names comprise about 35% of net assets of $4.7 million. Tesla (NASDAQ:TSLA), educational platform Coursera (NYSE:COUR), social media group Snap (NYSE:SNAP), language learning platform Duolingo (NASDAQ:DUOL), and cryptocurrency exchange Coinbase Global (NASDAQ:COIN) are among the top stocks on the roster.
ZGEN started trading on Dec. 16 at an opening price of $25.28. Now it is hovering at $21.09.
Motley Fool Next Index ETF (TMFX)
Expense Ratio: 0.50% per year
The Motley Fool Next Index ETF tracks a market-capitalization weighted index of mid- and small-cap U.S. shares. These names have been recommended by Motley Fool’s analysts and newsletters, but excludes the 100 largest stocks in the pool.
TMFX, which has 198 stocks, started trading in late December 2021. The top 10 holdings account for about 16.5% of net assets of $13.2 million.
Arista Network (NYSE:ANET), which provides cloud networking solutions; McKesson (NYSE:MCK), which distributes pharmaceutical products; Trade Desk (NASDAQ:TTD), which offers a digital advertising platform; diesel- and natural gas-powered engines manufacturer Cummins (NYSE:CMI), and science technology and innovation company Corning (NYSE:GLW) comprise the leading five stocks.
Year-to-date, TMFX declined over 8%, and hit an all-time low in recent days. Compared to large-cap shares, mid- and small-cap stocks are generally more volatile. But they also offer higher growth potential in the long-run. Therefore, you might want to keep this new ETF on your radar.
New ETFs: VegTech Plant-based Innovation & Climate ETF (EATV)
Expense Ratio: 0.75% per year
Environmental protection, as well as sustainable food production, have recently become among the most-followed investment themes. Our last fund, the VegTech Plant-based Innovation & Climate ETF, invests in businesses that focus on plant-based technologies and innovation.
Companies in the fund might make animal-free products, provide plant-based foods or materials, and develop agriculture technology. EATV was also listed in December 2021. It is an actively-managed ETF that currently holds 37 stocks. The top ten holdings account for roughly 58% of total net assets of $3.1 million.
Among the leading names are the plant-based meat provider Beyond Meat (NASDAQ:BYND); MGP Ingredients (NASDAQ:MGPI), which provides starch food ingredients; synthetic-biology company Amyris (NASDAQ:AMRS); skin-care products manufacturer E.L.F. Beauty (NYSE:ELF); and Ingredion (NASDAQ:INGR), which provides food ingredients, starches and sweeteners.
EATV has declined almost 7% year-to-date (YTD) to see a record low in recent days. Yet a recent Meticulous Research report indicates that the alternative protein market could surpass $27 billion by 2027, growing at a compound annual growth rate (CAGR) of over 11% from 2020 to 2027. Long-term investors with a horizon of three to five years may consider investing in the fund at the current levels.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.