2022 ETF and Investing Trends to Watch

Should you rotate from stocks to bonds and funds? Are cryptocurrency investments worth the volatility? What are the dominant themes for investing in 2022?

Predicting the future can be a risky exercise at any time. It can be especially so in times of uncertainty, and there is no shortage of uncertainty before 2022. But a group of panelists said that exchange-traded funds (ETFs) and cryptocurrency adoption will continue to grow this year, during a panel discussion on 4 January. , 2022, courtesy of Investopedia and ETFTrends.com.

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  • The markets experienced an unexpectedly wild ride in 2021. For 2022, experts suggest taking a new step and moving away from large-cap stocks.
  • The risk environment should ensure the continued adoption of cryptocurrency across global markets.
  • Speakers predict that exchange-traded funds (ETFs) will continue to proliferate in 2022.

Their assessments for 2022 come at a particularly unpredictable time in the markets. At the end of 2020, asset prices rose dramatically, and the S&P 500 gained more than 16% in a year when the pandemic brought the US economy to a standstill. Then, investment analysts said prices have “stretched” and there is a “good possibility” of a pullback in 2021, reminding investors that “stock prices aren’t going up forever.”

But the extended prices did not go down or down. Instead, the S&P 500 rose about 27% in 2021. Next year presents an even more confusing scene. Inflation is on the rise. New variants of COVID have emerged. The Federal Reserve is expected to raise interest rates next year.

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For 2022, committee members recommended a new market action. “Throw [out] for you [portfolio] Model. “It doesn’t make sense,” said Joshua Brown, founder of Ritholtz Wealth Management, an investment advisory firm, noting that the past three years have been the stock market’s best period since 1999, despite the COVID turmoil.

In 2022, big-growth corporate stocks, which include prominent technology stocks, will take a “break” from market-leading gains, according to Brown. Instead, he urged investors to look elsewhere in the market that might promise profits, such as growth in small businesses or stocks of small value.

Liz Young, head of investment strategy at millennium-focused personal finance (SoFi) firm SoFi, echoed Brown’s view. “In an environment where interest rates are rising, other sectors [not tech] Take the lead,” he said, referring to the expected monetary tightening by the Federal Reserve expected in 2022. For younger investors who may have followed the herd in tech stocks, this means it may be time to diversify their funds into other sectors such as healthcare, Young said. The switch to clean energy also offers many investment opportunities.

Speakers also identified other topics that are expected to take center stage in the coming year. Cryptocurrency is one of them. Stimulus funds combined with lower interest rates have pushed investors money into risky assets, such as cryptocurrencies, during the pandemic.

The market capitalization of cryptocurrencies has grown to over $1 trillion during this time. Decentralized finance (DeFi) and non-fungible tokens (NFTs) are becoming the latest buzzwords, and governments around the world are considering the introduction of central bank digital currencies (CBDCs).

According to SoFi’s Young, currency volatility will double in 2022 as central banks around the world chart their economic recovery from the pandemic. Young said the volatility will drive greater adoption of cryptocurrencies across the global economy. During 2021, the markets saw the emergence of the first Bitcoin futures-based ETF into the economy. This year there will be more ETFs tied to bitcoin, according to Leah Wald, CEO of Valkyrie Investments.

ETFs were another asset class that had a distinct year in 2021. Dave Nadig, chief investment officer at ETFTrends.com, said four new ETFs were opened for each closed fund. By the end of 2021, ETFs had received more than $900 billion in inflows. “There is a clear amount here that the ETF will be a strong cover for any kind of exposure an investor is trying to get,” Nadig said.

The hunger for ETFs as a way to spread investments across different asset classes is reflected in the breadth of ETFs that cater to investors of all shapes. Big investors, like Vanguard, have already pooled large cap stocks with money in their funds. This means that risky assets, such as bitcoin, will have the support of investment managers looking for profits.

Eric Balchonas, chief ETF analyst at Bloomberg, said the Ark Transparency ETF (CTRU), which seeks to mirror the performance of the world’s 100 most transparent companies, is the company’s “hot sauce” to investors. It also identified the Avantis International Small Cap Val ETF (AVDV) as another option. However, the Bitcoin spot ETF, long considered the holy grail by crypto enthusiasts, will not be approved by the SEC this year, according to Nadig of ETFTrends.com.