7 ETFs That Every New Investor Should Consider in 2022

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Friday, January 21, 2022

7 ETFs That Every New Investor Needs to Consider in 2022

Bitcoin is down nearly 20%. Inflation is projected to continue to grow again this year. Supply chain problems are expected to last through the year.

These are just a few items contributing to investor uneasiness and uncertainty, thus making the first 21 days of 2022 a roller coaster of emotion for many investors. This additional uncertainty creates additional volatility in the markets for investors, who are looking for the best ways to maximize their investments returns while reducing unnecessary risk.

In the best of times, picking individual stocks is akin to finding a needle in a haystack. In times of greater volatility and uncertainty, it’s like trying to find a needle in a haystack–when you don’t know where the haystack is today or where it might be tomorrow.

One easy way that new investors can more comfortably navigate such volatility and capitalize on opportunities for growth are through Exchange Traded Funds (ETFs). As we highlighted in a previous article, ETFs are a basket of goods that provide diversification in a market or sector.

The diversity in an ETF usually shields investors from extreme negative volatility and potentially massive portfolio losses, while typically providing holders with income through recurring dividend payments. Investors can capitalize on future appreciate of the ETF price, while enjoying income in the interim. These are just some of the reasons why we believe that ETFs should be a significant part of any new investors portfolio.

However, with more than 2,500 ETFs currently available to investors, it can seem impossible to many investors to know which ETFs should be a part of a portfolio. Therefore, we’ve put together a list of 7 ETFs for you to consider that figure to make this task easier for you while getting the best returns in 2022:

7. iShares Core S&P Small-Cap ETF (IJR: NYSE Arca)

Small-Cap companies are much smaller and have less cash than large-cap companies and industry titans such as Apple or Microsoft. However, small-cap companies typically have more potential to grow. This is because it’s easier for smaller companies to double their revenues and drive their stock prices higher faster and a giant such as Apple.

This realized potential has led them to significantly outperform the S&P 500, or the largest 500 U.S. companies, during the last 10 years. However, individual small-cap companies are also at a higher risk of going out of business than their large-cap counterparts.

The iShares Core S&P Small-Cap ETF (IJR) allows you to lower this risk through diversification among numerous small-cap companies in this ETF. Despite this reduced risk, there is incredible growth potential as evidenced by their annual returns of 22.79%, 11.24%, and 26.69%, respectively, from 2019 to 2021.

6. iShares Core MSCI Emerging Markets ETF (IEMG: NYSE Arca)

Emerging markets, of which BRIC (Brazil, Russia, India, China) are probably the most famous, provide massive growth opportunities for investors. Led by China’s GDP of 16.8 trillion (USD), the 2021 GDP for the BRIC countries was an estimated 23.5 trillion (USD).

This total tops the 22.9 trillion (USD) total of the world’s current leader, the United States. The economies of China and India are both projected to overtake the United States’, beginning in the next few years with China expected to claim the top spot.

It’s pretty clear that emerging markets offer incredible growth opportunities for you, and IEMG figures to be able to adequately balance reduced risk and potential growth opportunities.

From 2019–2021, IEMG had annual returns of 17.5%, 18.18%, and -0.64%, respectively.

5. KraneShares MSCI China Clean Technology ETF (KGRN: NYSE Arca)

Government regulatory crackdowns on large companies and concerns over their zero Covid policy have reduced potential returns, as highlighted by IEMG’s 2021 returns and SDIV’s 2020 return. Despite these issues China continues to figure as an area of growth opportunities for investors, as evidenced by its economic growth rate of 8.1% in 2021.

The KraneShares MSCI China Clean Technology ETF (KGRN) allows investors to capitalize on this potential growth, in environmentally responsible ways. KGRN is made up of securities that derive at least 50% of their revenues from environmentally beneficial products and services, such as the popular EV (electric vehicle) maker NIO.

Since 2019, KGRN has produced annual returns of 11.85%, 136.07%, and 5.46%.

4. Technology Select Sector SPDR Fund (XLK: NYSE Arca)

The combination of the incredible rise in the global acceptance of working from home, increase in wearable technologies, and the everyday tech solutions needed for governments, companies, and people to exist in the world in 2022 mean that there are plenty of foreseeable growth opportunities for growth.

Even giants like Apple and Microsoft, which make up more than 40% of Technology Select Sector SPDR Fund (XLK) continue to grow. The previous returns for XLK in the last three years are 49.97%, 43.67%, and 34.55% respectively, and figures to have another great year in 2022.

3. Global X SuperDividend ETF (SDIV: NYSE Arca)

The Global X SuperDividend ETF (SDIV) is an ETF that covers 100 of the world’s highest dividend paying equities. Growth investors probably won’t appreciate this ETF, based on its overall negative performance versus that of the S&P 500. SDIV has annual returns of 12.64%, -20.71%, and 3.55% respectively over the last three years.

However, value investors can find value in its high yield, distributed via monthly dividends. Since nearly 30% of this ETF is invested in Chinese companies, the its volatile returns figure to stabilize as the business climate in China stabilizes.

2. Nuveen Short-Term REIT ETF (NURE: BATS)

Real estate has been long seen by investors as the flag bearer when it comes to investment potential growth. However, purchasing real estate has not been a reality for most people, perhaps including yourself, since the entry costs can be quite prohibitive.

However, the advent of REITs (Real Estate Investment Trusts) and REIT ETFs has made access to real estate ownership more accessible. The Nuveen Short-Term REIT ETF (NURE) allows investors like you to reap the benefit of ownership stakes in real estate properties such as hotels, apartment buildings, and storage facilities.

NURE returns for the last three years were 24.70%, -7.30%, and 53.19%, respectively. While 2020 wasn’t a great year for the ETF, it bounced back in a big way in 2021. Despite a slow start in 2022, NURE figures to be a great opportunity for investors.

1. SPDR S&P ETF Trust (SPY: NYSE Arca)

Like the Rose Bowl in college football, the SPDR S&P ETF Trust (SPY) is “The Granddaddy of Them All” in the ETF world. SPY is the easiest AND the least expensive way for investors to capitalize on the annualized returns of the S&P 500.

The S&P 500 has averaged annual returns of about 10.5% since its inception in 1957. (Based on the rule of 72, at this rate your money would double just about every 7 years.) The previous three years have seen even better returns for investors.

For the years 2019–2021, SPY had annual returns of 31.29%, 18.25%, and 28.59% respectively. The S&P 500 had similar returns over that same period of 28.88%, 16.26%, and 26.89% respectively.

These are 7 ETFs that will get you started on the right track to investment success in 2022 and beyond. For more information about these ETFs, contact us or check out YahooFinance and the SEC’s EDGAR system.

Happy investing and good luck in 2022!!!

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