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In the past few years, thematic investing has attracted several investors as it focuses on broad macroeconomic trends to analyze investment options rather than specific companies. Thematic decision making aligns investment decisions with noticeable social, corporate or economic trends and is based on ideas rather than facts alone. The coronavirus outbreak wreaked havoc across the globe last year and is still causing damage to economies. Even during those downturns, certain investment themes helped investors keep their funds from sinking. For instance, environmental and sustainability became widely recognized as a popular trend.

At present, governments around the globe are trying to vaccinate majority of the population and restrict the virus from spreading further. Markets rejoiced the progress in vaccine making and news on higher production. Going ahead with the optimism that things will be back to normal soon, investors should now focus on high-growth investment vehicles. Here are four such high-growth themes that can render big gains this year–

5th Generation (5G)– 5G puts forward some very interesting prospects for 2021. From infrastructure, components to delivery, the supply chain plays a crucial role for the technology rather than the thing itself. Device makers are trying to secure enough parts like semiconductors and displays, which require a long time to manufacture. Hence, investors can focus on next-gen telecom networks as a huge transition in telecom infrastructure awaits.

Fintech– While the pandemic disrupted the global economy, it pushed Fintech for the best, proving the power and portability of digital technologies. Though bricks-and-mortar stores were trying to go online to stay in trend before the pandemic, many failed to embrace financial services at will. Amid social distancing and remote working spree, the fintech arena has shown customers that they have more to offer than just mobile payments services. From cloud-based accounting services to automated compliance and fraud-protection technologies, they have proven their true potential to businesses and are poised to grow in 2021.

Biotech– The pandemic puts innovative healthcare solutions in focus now more than before. In fact, the biotech space is poised to grow further as population’s age, technology advances, and patients opt for hands-on approach to self-care. Biotechnology plays a prime role in the treatment and cure of other rare and chronic diseases. And these innovative solutions typically come from smaller-cap biotech firms, which are then targets of larger-cap pharmaceutical companies. Hence, mergers and acquisition activities will also keep this sector booming

Clean Energy– President Joe Biden’s clean energy plan calls for making the United States power sector carbon-neutral by 2035. With the global economy now focusing more on climate change and carbon emissions, clean energy companies, particularly wind and solar firms, will witness significant growth. Given the current plans being implemented by the government, this theme is sure to make a lot of money for investors.

4 Funds Picks

We have highlighted four mutual funds that encompass the aforementioned themes and carries a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to grow further. Moreover, these funds have encouraging year-to-date (YTD) returns. Additionally, the minimum initial investment is within $5000. We expect these funds to outperform their peers in the future.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds.

New Alternatives Fund Class A (NALFX - Free Report) seeks long-term capital growth, with income as its secondary objective. It primarily invests in common stocks of companies and even in other equity securities such as real estate investment trusts and American Depository Receipts etc.NALFX has significant investment in clean energy firms like Brookfield Renewable Energy, NextEra Energy and Transalta Renewables.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. The fund has three and five-year returns of 24.4% and 21.5%, respectively.

NALFX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.08% compared to the category average of 1.29%.

Fidelity Select Technology Portfolio (FSPTX - Free Report) aims for capital appreciation. The fund invests primarily in equity securities, especially common stocks of companies that are engaged in offering, using, or developing products, processes, or services that will provide or will benefit significantly from technological advances and improvements. FIDSX has significant investment in fintech firms like PayPal, Fiserv and Visa.

This Zacks Sector – Tech product has a history of positive total returns for more than 10 years. Specifically, FSPTX has returned 27.8% and 28.3% in the past three and five years, respectively.

FSPTX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.71%, which is below the category average of 1.24%.

Fidelity Select Financial Services Portfolio (FIDSX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of assets in the common stock of companies engaged in providing financial services to consumers and the industry. FIDSX has significant investment in fintech firms like The Travelers Companies and Visa.

This Sector - Finance product has a history of positive total returns for over 10 years. Specifically, the fund has three and five-year returns of 2.3% and 8.1%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.

FIDSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 1.34%.

Fidelity Select Biotechnology Portfolio (FBIOX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of net assets in common stocks of companies mostly engaged in the research, development and distribution of biotechnological products.

This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 17.4% and 9.1% over the past three and five-year period, respectively. 

FBIOX, a Zacks Mutual Fund Rank #2 fund, has an annual expense ratio of 0.72%, which is below the category average of 1.18%.