Who says ETFs have to be boring investments that just track the overall stock market?
Investors who invest in certain specific ETFs have the potential for huge upside. Here are three such ideas.
Junior Oil
The energy market has been hammered over the past two years, with small oil companies really taking it on the chin. The BMO Junior Oil Index ETF (TSX:ZJO) is down more than 50% from its 2014 peak.
The thesis is a simple one. As energy continues to recover, junior oil stocks will lead the way.
This will work out well for investors willing to bet on the contrarian sector today when it’s truly cheap.
Emerging Markets
Led by nations like Brazil, Turkey, and Russia, emerging markets have not been good places to
invest over the last few months. But long-term, these are going to be big growth stories.
Investors can get exposure to these markets without leaving Canada by investing in iShares MSCI Emerging Markets IDX ETF (TSX:XEM), which has exposure to those countries plus China, Korea, and dozens more.
Small Caps
Over the long-term, returns of smaller stocks almost always trump those of larger stocks, at least over a whole market. This is primarily because it’s easier to grow small companies and investors don’t pay as much attention to them, which creates better opportunities.
Canada’s largest small cap ETF is iShares S&P/TSX Small Cap Index ETF (TSX:XCS), which has a market cap of approximately $150 million and holds positions in 215 different Canadian companies.
