An ETF themed around working from home aims to let investors cash in on COVID-19 lockdowns
With millions of the world’s population on lockdown during the coronavirus pandemic, industries that support work-from-home lifestyles are riding unprecedented waves of popularity (e.g. Zoom, Slack), and Wall Street investors are clamoring to cash in on their success.
According to a Securities and Exchange Commission filing on Tuesday, Direxion, an exchange-traded fund provider, is planning to start a new exchange-traded fund (ETF) that follows industries within the “work-from-home” sphere, such as remote communications, cloud technologies, and cyber security.
The Direxion Work From Home ETF will trade under the ticker WFH.
As Bloomberg noted, thematic funds, “which seek to capture trends that are easily explained to retail investors,” have struggled in a saturated ETF market.
But even so, WFH seems strategically positioned. Despite signs that the virus is peaking in major cities across the United States, projections for when lockdowns will lift are all over the place, so we shouldn’t expect to return to the offices soon.
And some experts predict that work-from-home trends spurred by social distancing and self-quarantine will linger even after the pandemic ends. In a blog post on Monday, The Brookings Institution, a Washington-based public policy group, argued that telecommuting was already rising pre-pandemic, and “in the post-pandemic world, it may stay with us as a popular practice that, if done well, can improve job satisfaction, raise productivity, reduce emissions, and spread work to more remote regions.”
But WFH has skeptics, too. TheStreet, a financial news website cofounded by Mad Money’s Jim Cramer, pointed out that WFH is set to track the Solactive Remote Work Index, which is “comprised of 40 U.S. listed securities and American Depository Receipts that have significant exposure to the companies that specialize in providing products that focus on the ability to work from home.” Solactive’s top five holdings are Microsoft, Amazon, Facebook, Alphabet, and Cisco—and if WFH is closely correlated, wrote TheStreet, it will be “nothing more than a bland, generic tech ETF.” (Burn.)
“If WFH is going to be successful,” TheStreet added, “it can’t end up looking like a plain vanilla tech fund.”
In short, TBD on whether the WFH ETF is a hit or miss. Kthxbye.