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Why The Future Is Bright For The Work From Home ETF

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Why The Future Is Bright For The Work From Home ETF

An array of exchange-traded funds with obvious links to the coronavirus are popping up in the wake of the pandemic.

What Happened

One of the obvious standouts in the coronavirus ETF fray, particularly because it features no exposure to healthcare stocks, is the Direxion Work From Home ETF (NYSE: WFH). WFH debuted in late June and now has $73.30 million in assets under management, making it one of this year's most successful new ETFs while dispelling notions that it's gimmicky and that COVID-19 ETFs must be healthcare plays.

Actually, WFH is far from gimmicky as proven by allocations to cloud computing, cybersecurity, document management and online communications providers. After all, each one of those themes was booming prior to the pandemic and forecast to continue doing so when the virus is defeated.

Why It's Important

As is the case with any of the fund's spawn following the pandemic, investors should assess the longer-term viability of WFH, meaning how will this fund act in a world where coronavirus isn't the issue of the day.

The good news is cloud computing and cybersecurity have ample, multi-year runways for growth that are enhanced by but not dependent upon working from home. Still, it's hard to get around an ETF's name and ticker and in the case of WFH, the good news is close to 40 percent of U.S. jobs, many of which are on the higher end of the salary scale, can be performed remotely.

Whether or not 40% of American workers ever work from home, even on a part-time basis, isn't material to the WFH thesis. What is that the number of employees that are home-based is poised to increase with an assist from COVID-19.

What's Next

Bolstering the longer-ranging thesis for WFH are the benefits to employers in allowing more staffers to work from home. A study conducted by Stanford University confirms that work from home employees take fewer breaks, sick days and time off. They are also less likely to be late for work or depart early.

In other words, work from homers are more productive. Funny thing about that study: it has nothing to do with coronavirus as it was conducted four years ago.

Another point in WFH's favor is that at a time when so many investors are prioritizing environmental, social and governance (ESG) principles, the Direxion fund certainly aces the “E” because anyone working from home is reducing their carbon footprint in the process and that's something companies prioritizing environmental stewardship should consider.

 

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