ETFs well-positioned to benefit from infrastructure spending

Yahoo Finance’s Alexis Christoforous and Kristin Myers discuss ETFs to watch with Cinthia Murphy, Managing Editor of ETF.com.

Video Transcript

ALEXIS CHRISTOFOROUS: Time now for our ETF report, brought to you by Invesco QQQ. I want to bring in Cinthia Murphy of ETF.com. She is the managing editor there. Cinthia, good to see you. You just heard that energy report from Emily. And I know that energy is among some of the hot ETFs so far this year. Here we are in the second quarter. Give us a feel for some of the other popular ETFs so far in 2021.

CINTHIA MURPHY: Hi, Alexis. Yeah, I mean, energy has been a really hot sector this year, I mean specifically tied to some of the bigger news of the day in terms of this whole infrastructure conversation we've been having for a couple of days now. You know, clean energy specifically has found a second wind, if you will. I mean, if you remember, 2020 was a huge year for clean energy stocks it was a lot of it was fuel during the presidential election, campaign, all the talk about big investments in clean energy. And then they got really overrun.

And they started the year in a really soft stage, just kind of correcting a little bit, giving some of that back, I mean, those triple digit gains. And a lot of these stocks last year were insane. And now that it looks like we finally have pen to paper on an infrastructure bill, a proposal out there with numbers backing up investment in some of these parts of the market, we're seeing clean energy specifically going to pick up some steam and rally a little bit in the last few days. So it's a part of the market that was really hot, gave some back, and now is is back in a groove this week.

KRISTIN MYERS: All right, Cinthia, so I want to expand on that a little bit. We saw Cathie Wood launching that space exploration ETF. I'm wondering-- I know that you're mentioning clean energy is something that's very hot right now. Are there any other ETF spaces that people should be looking at, perhaps any thematic ETFs that people should be looking at right now, especially as we move out of that work from home-- I know that was a huge theme that everyone had been looking at for quite some time. As we head towards reopening, how do you think folks should start approaching their portfolios?

CINTHIA MURPHY: Yeah, I think just a general concept of, you know, thematic investing. Last year, it worked really well. So when people looked beyond your traditional sectors-- energy, financial, materials-- and actually looked at more from a theme perspective, so which parts of which industries and subsegments really are promising right now, it really picked up some steam. The work from home, the pandemic put a lot of these themes into focus.

And some of that has carried to this year. I actually, I don't think it's going to go away. I think theme investing is definitely here to stay. When you look at-- for example, we were just talking about energy-- clean energy as a theme, more so than just an energy sector ETF, that's a spot that's picking up a lot of interest. Space for sure, if you want to go that route.

When you talk about electric vehicles, so the ETFs that really hone in on the companies involved in developing the technology, which is, you could say it's a play on the electric grid. But it's really on the EV part of the story. So there's a lot of these subsegments that are really garnering attention. And some ETF providers do a great job of providing that focused exposure within these themes.

So the trouble here is, is that there really is no clean definition of what is a clean energy stock, what is some of these segments that are really, like, on the eye of the beholder. So there really isn't one good ETF to capture one specific theme. A lot of times, it depends on what you are looking for. And that's why we see flows, we see the demand kind of go around to a lot of different parts of the market sometimes.

ALEXIS CHRISTOFOROUS: All right, Cinthia Murphy of ETFs.com, thanks so much for being with us.