3 Funds To Replace Tech Winners In 2021 On Easing Volatility

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Though the pandemic has thrown a curveball to consumer stocks haywire, technology stocks have been doing surprising well with a great number of people staying and working from home. The Technology Select Sector SPDR Fund (XLK) has jumped 41.7% so far this year compared with the S&P 500’s rise of 15.4%. The rally in technology stocks has helped the Nasdaq Composite add nearly 43% this year despite the pandemic-led slump.

The development of a viable coronavirus vaccine has cheered investors and is one of the factors pointing to a favorable turn for the market stepping into 2021. The two pacesetters in the vaccine race, Pfizer-BioNTech, and Moderna have received emergency use authorization from the FDA for their respective coronavirus vaccines. In fact, last week, Pfizer-BioNTech announced a second deal with the U.S. government to supply an additional 100 million doses by the end of July 2021. This deal reaches the total number of doses available for American to 200 million. Notably, the government aims to vaccinate 20 million Americans by the end of next year.

Along with that, on Dec 26, President Donald Trump signed the new coronavirus relief package of $900 billion into law. A $600 stimulus check for every household and the revival of Pandemic Unemployment Assistance, rent payment forgiveness, and a host of other things have boosted sentiments. Additionally, travel stocks that suffered the most due to the pandemic received airline payroll support and are part of more than $45 billion of transportation relief funds. Airlines companies have advanced in the past few sessions and are set to receive $15 billion in additional payroll assistance under the new stimulus aid.

Also, the Federal Reserve will be keeping rates near zero in 2021 to help ramp up economic activities and revive businesses from the coronavirus-induced slowdown. The Fed will not hike rates until 2023 and this will in turn promote the investing environment. In such a scenario, investors can easily look into other mutual funds than those focused on technology as these sectors will continue to grow with economic revival.

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