When looking for what to invest in, investors typically think of the standard industries and companies (financials, energy, consumer goods, etc.). However, the diversity of the US stock market offers some unexpected choices that investors can consider.
#1: China Stock Market (Ticker: FXI)
While there are investment limitations for foreigners looking to buy Chinese stocks, it doesn’t mean retail investors do not have any way to invest in the Chinese stock market. FXI tracks the performance of China Large-Cap companies that are traded on the Hong Kong Stock Exchange.
It does not contain some mainland and US-listed mega-caps like Baidu Inc (BIDU). Nonetheless, it provides strong exposure to the Chinese stock market and especially China’s big state-owned banks. Due to its huge asset under management (AUM) and popularity leading to high trading volumes, it is very liquid – which is a plus for more opportunistic investors.
#2: Uranium-related Stocks (Ticker: URA)
Are you a believer in nuclear energy? Or just looking for an alternative way to diversify your portfolio holdings? URA, the Global X Uranium ETF, may be your answer.
URA is the only ETF that currently provides exposure to uranium-related firms worldwide. Interestingly, it is also weakly correlated to global stock markets – making it a potential candidate to diversify your investment portfolio.
However, investors need to bear in mind the drawbacks of this ETF. Despite its global nature, it only has 24 holdings, which exhibit high levels of concentration of small and micro-cap stocks. This increases the investment risks – although such exposure might be helpful in diversification.
#3: Lithium-related Stocks (Ticker: LIT)
Perhaps lithium is further up your alley. Dubbed by Goldman Sachs as “the new gasoline”, lithium has captured global investors’ attention due to its potential in electric vehicles (EVs). Lithium itself has seen an epic price run (up approximately 225% since 31 Dec 2014).
Although lithium isn’t exchange-traded, one way to invest is through the Global X Lithium ETF (LIT). It invests in companies that cover the entire production cycle, from exploration to production of batteries. Nonetheless, just like URA, its niche nature leads to it being highly concentrated (25 holdings), with the top 10 holdings capturing majority of the portfolio. Therefore, the ETF structure also carries some investment risk, but has its uses as a diversification tool.
Top Image Credit: DollarsAndSense.sg
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