4 Best ETF Sectors Of Q4

The fourth quarter of 2020 has been an eventful one through and through. There were the all-important efficacy reports of coronavirus vaccines from Pfizer, Moderna and AstraZeneca. Then Joe Biden won the U.S. presidential election and the election results brought along a divided Congress.

The quarter has also seen a tug-of-war between the Democrats and Republicans on the second round of a COVID-19 relief bill. It is just the latest December when Democratic and Republican leaders clinched a new relief deal worth around $900 billion that comprises a second round of stimulus checks and further unemployment benefits. The bill will soon be up for a vote in the House and the Senate.

Though the size of the deal this time is much smaller in scale than the earlier ones, any kind of fiscal stimulus is great. Quite expectedly, stocks soared in Q4 on vaccine and stimulus hopes. Wall Street hovered around an all-time high level. Small caps made a great comeback having suffered for the most part of the year.

S&P 500-based SPDR S&P 500 ETF Trust SPY, Dow Jones-based SPDR Dow Jones Industrial Average ETF Trust (DIA), Nasdaq-100-based Invesco QQQ Trust (QQQ) and small-cap iShares Russell 2000 ETF (IWM) gained about 11.2%, 10%, 13.7% and 32.5%, respectively, in the past three months (as of Dec 22, 2020). Against this backdrop, below we highlight the winning sector ETFs of the fourth quarter.

Clean Energy

Biden has expansionary plans for clean energy. He is forming a plan — a Clean Energy Revolution — to address the issue of climate emergency. He sees America as becoming a 100% clean energy economy by 2035 and having net zero emission by 2050.

In fact, he has a $2-trillion-plan toward combating climate change that will eliminate carbon emissions from the power grid by 2035 and accelerate the uptake of electric vehicles. If this happens, the entire supply chain of the electric vehicle industry will be charged up.

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