It’s no secret that the stock market has been on a roller coaster ride so far in 2020. From global trade tensions, to the COVID-19 pandemic, to record-setting unemployment and economic unrest at home in the U.S., there has been a lot to shake the markets this year, leaving them down more than 40% by late March.

Granted, the situation has improved since then, and as of June 10, 2020, the market had regained most of those losses, with the Nasdaq actually inching out a small gain for the year to reach a new all-time high. According to Statista, the Nasdaq, S&P 500 and Dow Jones industrial average are up 43%, 45% and 46% from their March troughs.

But fear remains that the volatility isn’t over for these benchmarks, and investors are looking for ways to outperform them in the short- to medium-term. To do that, many are turning to ETFs and mutual funds that track similar sectors but with different weightings and investment theses.

Here is a look at some of the recent trends in the major indices as well as some of the investment options that are outperforming them.

Emerging Markets

Lazard paints a grim picture for the emerging markets.

“Like all equity markets, emerging markets equities entered 2020 off a very good run in the fourth quarter of 2019 and ended the first quarter significantly lower. Despite a recovery in the last week of March helped by unprecedented global central bank measures, the MSCI Emerging Markets Index ended 24% lower in the first quarter. Latin America was the hardest-hit region, with the MSCI Emerging Markets Latin America Index down 46% year to date. Even the best-performing country market, the MSCI China Index, was down 10%.”

The driver behind all this, of course, was the global outbreak of COVID-19. But the pandemic hit different parts of the world more intensely than others, particularly in the developing world where countries like Brazil and Peru have suffered mightily. Couple that with the ongoing oil price war between Russia and Saudi Arabia and disruptions to the global supply chain, and the impact felt on the emerging markets has been severe, driving down the MSCI Emerging Markets Index by 24% as of the end of March. 

However, investors interested in tapping the emerging markets while outperforming the benchmark that is EEM have some options. A search on Magnifi suggests that there are a number of different funds and ETFs available for this part of the market that are doing better than the MSCI index.

S&P 500

As the benchmark for U.S. equities, the S&P 500 has borne the brunt of the COVID-induced crash as well as much of the recent recovery. But that doesn’t mean all is well in the equities market this summer.

Even before the pandemic hit, S&P Global Ratings was predicting a tough year for stocks, with risk factors including government borrowing, healthcare spending, international trade and more. By May, Goldman Sachs was predicting a nearly 20% drop this quarter with headwinds lasting well into 2021.

The benchmark ETF for the S&P, of course, is SPY, but there are a number of different ways for investors looking to outperform the market to access much of what makes up SPY with different weightings.

For instance, Magnifi uncovers a number of different ETFs and mutual funds that are outperforming SPY without veering too far away from the S&P 500’s core holdings and index-focused investment approach.

Nasdaq

As mentioned, things have been looking better for the Nasdaq lately than for the rest of the equities markets. On June 8, the tech-heavy index reached a new all-time high, closing near 10,000 for the first time ever. Tech heavyweights like Facebook, Amazon,  Apple, Google (aka Alphabet) and Netflix -the so-called FAANG companies – drove much of this rally and continue to rise.

But this recent streak of positive returns for the Nasdaq and its benchmark ETF, QQQ, doesn’t mean there aren’t ways to outperform this segment of the market. Not every holding in QQQ is a FAANG stock, after all.

Consider the options that Magnifi presents for outperforming ETFs and mutual funds that cover the tech and internet space.

Ecommerce

Like technology, the first half of 2020 has set up almost perfectly for ecommerce. While the shop-from-home segment was already on the rise, when millions of people were suddenly stuck at home due to COVID-19 it took off in ways that even the most savvy predictions didn’t see coming.

According to Statista: “The eCommerce market has evolved from a simple counterpart of brick and mortar retail to a shopping ecosystem that involves multiple devices and store concepts. Now, when looking at the eCommerce landscape, we see a relatively mature market with established players and a clear set of rules.”

The global ecommerce market is expected to exceed $2 trillion this year, led by nearly $700 billion in spending in China alone. In fact, the bulk of online buying is moving from the U.S. and Europe to Asia, in part due to increasing internet and mobile penetration in that part of the world, coupled with increased buying power.

Given this growth, finding ways to outperform the ecommerce benchmark fund, EBIZ, isn’t easy. But a search on Magnifi suggests that it is possible by focusing on particular parts of the online retail industry and smaller cap funds.

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