Wall Street extended its solid bull run to start 2021 buoyed by COVID-19 vaccine rollout as well as hopes of a bigger fiscal package and infrastructure spending under a Democratic-led U.S. Congress.

President-elect Joe Biden vowed to unveil an economic stimulus package worth trillions of dollars, which would include relief for unemployed Americans and rent forbearance for tenants, once he enters the White House, after Democrats won control of the Senate. Biden also called for raising the minimum wage to $15 — a campaign promise — and for sending out $2,000 in direct cash payments.

Additionally, unprecedented stimulus from the government and the Fed are driving the bulls. However, surging COVID-19 cases and geopolitical tension will continue to weigh on the stocks.

Against such a backdrop, we have highlighted a pack of ETFs that are poised to outperform in 2021:

iShares Core S&P Small-Cap ETF IJR: Given that the small-cap companies are closely tied to the U.S. economy, these outperform on improving American economic health. A low interest rate and vaccine optimism bode well for small-cap stocks as these would push up economic activities and result in higher spending, thus boosting domestically focused companies. IJR, offering a broad exposure to U.S. small-cap stocks, seems a compelling choice. It has AUM of $60.1 billion and a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Small Caps Outperform to Start 2021: 5 Best ETFs of Last Week).

Invesco NASDAQ 100 ETF QQQM: It is basically a cheaper version of Invesco QQQ (QQQ), making it more suitable for buy-and-hold investors. The fund comes with 15 bps in annual fees and has attracted $385.9 million in just three months. It has been enjoying high demand buoyed by a technology craze as the pandemic led to a global digital shift for everything ranging from remote working to entertainment, and shopping.

Global X Cannabis ETF POTX: The “Blue Wave,” wherein Democrats will control both Houses of Congress and the White House for the first time in a decade, will be a boon to the cannabis industry. The government has the friendliest political environment for the cannabis industries in the United States as the incoming administration will speed up the legalization of marijuana at the federal level. POTX seeks to invest in companies across the cannabis industry and tracks the Cannabis Index. The product has accumulated $59.7 million in its asset base and charges 50 bps in annual fees.

iShares Global Clean Energy ETF ICLN: Clean energy ETFs are expected to see a continued surge with Joe Biden heading into the White House. Biden plans to pump $2 trillion into green energy over four years to build solar panels, charging stations and more; vows to rejoin the Paris climate in “exactly 77 days,” and aims for net-zero emissions by 2050. With AUM of $6.3 billion, ICLN offers exposure to companies that produce energy from solar, wind and other renewable sources. It charges 46 bps in annual fees (read: 5 ETFs to Buy For the Blue Wave).

WisdomTree Cloud Computing Fund WCLD: The pandemic has resulted in a dramatic shift in consumer behavior toward the digital world. Cloud computing has encouraged video conferencing, gaming, e-commerce, remote project collaboration, online classes and several other programs. This fund offers exposure to emerging, fast-growing U.S.-listed companies (including ADRs) primarily focused on cloud software and services. It charges investors 45 bps in fees per year and has amassed $1.3 billion in its asset base. The fund has a Zacks ETF Rank #1 (Strong Buy) (read: Tech Tops in 2020: ETFs & Stocks That More Than Doubled).

ProShares Online Retail ETF ONLN: This ETF could be an excellent pick to bet on this year given the continued dominance of global e-commerce sales. It focuses on global retailers that derive significant revenues from online sales. The product has amassed $1.1 billion in its asset base while charges 58 bps in annual fees from its investors.

Global X Telemedicine & Digital Health ETF EDOC: Telemedicine and digital healthcare seems bright even in the post pandemic world as customers will keep availing online medical consultation services from the comfort of their homes. As such, the new entrant in the space, EDOC, has garnered $686.9 million in its asset base within six months of its launch. The fund invests in companies positioned to benefit from further advances in the field of telemedicine and digital health, charging investors 68 bps in annual fees (read: ETF Market Outlook & Picks for 2021).

ARK Genomic Revolution Multi-Sector ETF ARKG: Innovation has been changing consumer habit and the economy. ARK defines ‘‘disruptive innovation’’ as the introduction of a technologically enabled new product or service that potentially changes the way the world works. ARKG is an actively managed fund focusing on companies that are expected to substantially benefit from extending and enhancing the quality of human and other life by incorporating technological and scientific developments and advancements in genomics into their business. The fund charges 75 bps in annual fees and has gathered $9.4 billion in its asset base.

Global X Autonomous & Electric Vehicles ETF DRIV: This fund seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles (“EVs”), and EV components and materials. It is expected to benefit from a boom in the EV market, led by Tesla TSLA. The product has AUM of $369.7 million and charges 68 bps in annual fees (read: ETFs & Stocks to Bet on the EV Boom).

Vanguard FTSE Emerging Markets ETF VWO: Emerging market ETFs like VWO looks attractive given their super-easy policies, wider rollout of COVID-19 vaccines as well as Joe Biden’s victory in the U.S. presidential election that has bolstered confidence into riskier assets. Additionally, a weak dollar against the basket of currencies has been pulling in more capital into the emerging markets. VWO targets stocks of companies located in emerging markets around the world, such as China, Brazil, Taiwan and South Africa. It has amassed $74.4 billion in its asset base and charges 10 bps in fees a year. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares TIPS Bond ETF TIP: The wider reach of vaccines have raised the prospect of inflation since these will lead to faster-than-expected economic recovery. While there are several options in the real estate space, TIP is the most popular with AUM of $26.7 billion and expense ratio of 0.19% (read: TIPS ETFs to Buy for 2021 on Inflation Trade).

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Global X Autonomous & Electric Vehicles ETF (DRIV): ETF Research Reports
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
iShares Global Clean Energy ETF (ICLN): ETF Research Reports
 
iShares TIPS Bond ETF (TIP): ETF Research Reports
 
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
 
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
 
ARK Genomic Revolution ETF (ARKG): ETF Research Reports
 
ProShares Online Retail ETF (ONLN): ETF Research Reports
 
WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
 
Global X Cannabis ETF (POTX): ETF Research Reports
 
Invesco NASDAQ 100 ETF (QQQM): ETF Research Reports
 
Global X Telemedicine & Digital Health ETF (EDOC): ETF Research Reports
 
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