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5 ETFs Under $20 to Buy for Outperformance

Most investors want to put their money in equities but may not be able to afford large stakes in valuable companies with higher-priced stocks. For them, low-priced stocks could be attractive as these will enable them to buy more shares instead of just a handful of higher-priced shares for the same amount. For example, an investor willing to spend $10,000 can either purchase at least 500 shares of a stock trading under $20 or only 100 shares of a stock trading at $100.

Additionally, stocks under $20 reap huge profits as an increase of as less as a dollar in share price adds 5% to the portfolio. This is in contrast to stocks priced at $100 or above, which see 1% or lower gains if shares move up by $1. Further, most of the low-priced stocks have high levels of liquidity, giving these stocks an added advantage. This means that cash can be converted quickly and investors could easily get their money out of the securities. In fact, trading in higher average daily volumes keeps the bid/ask spread tight and does not lead to extra cost for investors (read: Buy These 7 Amazing ETFs Trading at Low P/E Ratios).

And guess what, the latest volatility led by fears related to economic growth has provided investors a great opportunity to tap some of these stocks. The preference is not only limited to the stock world but can be felt in the ETF space. In fact, there are only a handful of ETFs that currently trade below $20 out of nearly 2,000 funds, suggesting that the choices are limited for investors who like to get a decent number of shares from their investment.
 
So, let us dig into some of the ETFs that are below $20 and have AUM of more than $50 million to ensure enough liquidity. These low-priced ETFs could lead to huge gains in the coming months based on encouraging market trends.

Invesco S&P SmallCap Energy ETF PSCE – Last Closing Price: $6.61

Though a spike in COVID-19 cases worldwide has taken a toll on energy demand lately, the sector looks good for at least the near term given declining inventories and production disruption. This is especially true as U.S. production is still struggling to recover from Hurricane Ida, which has disrupted supplies in the Gulf of Mexico even after nine days of the storm.

This fund provides exposure to the U.S. small-cap segment of the energy sector by tracking the S&P Small Cap 600 Capped Energy Index. It holds 33 stocks in its basket with AUM of $107.8 million. The fund trades in an average daily volume of 586,000 shares and charges 29 bps in fees per year. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Best Energy ETFs & Stocks of Last Week).

Global X Cannabis ETF POTX – Last Closing Price: $9.86

Cannabis stocks are poised for gains on a wave of wider legalization as well as the growing adoption of marijuana in more states.

POTX seeks to invest in companies across the cannabis industry and tracks the Cannabis Index. It holds 25 stocks in its basket, with Canadian firms accounting for 84.6% of the assets while the United States and Australia take 13.9% and 1.5% share, respectively. The product has accumulated $145.9 million in its asset base and trades in an average daily volume of 154,000 shares. Expense ratio comes in at 0.51%.

ETFMG Prime Junior Silver ETF SILJ – Last Closing Price: $13.16

Silver price will get a boost from the global economic recovery in the post-pandemic world, which would boost manufacturing and industrial activities. Notably, silver is used in a wide range of industrial applications. About half of the metal’s total demand comes from industrial applications, while 30% comes from jewelry/silverware/coins and medal manufacturers. Additionally, rising inflation will lead to higher demand for silver as an inflation hedge.

SILJ provides direct exposure to the small-cap silver mining exploration and production industry by tracking the Prime Junior Silver Miners & Explorers Index. It holds 48 stocks in its basket with the Canadian firms taking the lion’s share at 80.4%, while the United States takes a double-digit 11.5% exposure. The fund has managed assets worth $854.4 million and trades in a good volume of nearly 1.1 million shares a day. It charges 69 bps in annual fees.

Global X SuperDividend ETF SDIV – Last Closing Price: $13.49

The appeal for dividend-focused ETFs has been on the rise with bulls and bears playing tug-of-war lately. Concern that the fast-spreading Delta variant of COVID-19 could slow the economic recovery has made investors jittery while solid corporate earnings growth and the Fed’s accommodative policies are driving the stocks higher.

This ETF provides exposure to the 104 highest-dividend-paying equities around the world by tracking the Solactive Global SuperDividend Index. It has amassed $975.7 million in its asset base and sees a good trading volume of about 520,000 shares a day on average. The fund has an expense ratio is 0.59% and carries a Zacks ETF Rank #3 (Hold) with a Low risk outlook

SoFi Select 500 ETF SFY - Last Closing Price: $16.79

The S&P 500 hit a series of record highs last week despite bouts of volatility and uncertainty. It wrapped up its seventh-straight month of gains with the longest winning streak since the 10-month run that ended in December 2017. Renewed optimism over the global economic recovery after the first full U.S. approval of a COVID-19 vaccine, strong corporate profit growth and ultra-easy monetary policies bolstered risk-on trade (read: 5 Stocks That Power S&P 500 ETF in August).

This ETF offers exposure to the 500 largest U.S. companies as measured by market capitalization and uses a composite growth score to adjust companies’ weightings. It follows the Solactive SoFi US 500 Growth Index with an expense ratio of zero. Technology and consumer non-cyclical sectors take the largest share at 26.9% and 20.9%, respectively, while communications and financials round off the next two spots with a double-digit exposure each. The fund has amassed $315.9 million in its asset base while trades in an average daily volume of 89,000 shares.


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SoFi Select 500 ETF (SFY): ETF Research Reports
 
Invesco S&P SmallCap Energy ETF (PSCE): ETF Research Reports
 
ETFMG Prime Junior Silver Miners ETF (SILJ): ETF Research Reports
 
Global X SuperDividend ETF (SDIV): ETF Research Reports
 
Global X Cannabis ETF (POTX): ETF Research Reports
 
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