Overnight, working from home became the new normal for many around the world, particularly those working in large cities. It is not surprising that investment strategies recognize this trend.
In June, Direxion, a firm specializing in leveraged ETFs, launched the first work from home ETF (ticker: WFH). The fund invests in companies designed to facilitate remote working, “ranging from software, cloud computing and cybersecurity to online videoconferencing and project management.” While names include the newer favorites of those working from home, such as Zoom, stalwarts like Amazon, Facebook, Microsoft, IBM and Alphabet are also part of its investments.
On its website, Direxion identifies these Trends in Motion driving WFH investments:
Following Direxion’s introduction of WFH, BlackRock is planning to launch its iShares Virtual Work and Life Multisector ETF, which, per its SEC Filing, “will seek to track the investment results of an index composed of U.S. and non-U.S. companies that ‘provide products, services and technology that empower individuals to work remotely, and support an increasingly virtual way of life across entertainment, wellness and learning.’”
While we have seen “fad” funds come and go, this does not appear to be the case with these recent developments. These new fund launches support what most asset managers, others with whom we have spoken to and Optima Group believe to be a fundamental shift in the way business, and, to some extent, life is conducted. It is likely that we will see more entrants to this space and other strategies related thematically to fundamental shifts resulting from the pandemic, like the ETFMG Treatments, Testing and Advancements ETF (ticker: GERM), which invests in biotech companies involved in the testing and treatment of infectious diseases. This ETF launched in mid-June and has over $70 million in AUM. These specialized ETFs provide cost-effective ways for wealth managers to provide client portfolios with exposure to specialized asset categories that align with their firms’ long-term capital markets and investment outlook.