Market Overview

Capitalize On Offline To Online Seismic Shifts With This ETF

Capitalize On Offline To Online Seismic Shifts With This ETF

This is an online world we're living in and a slew of industries are adapting to that trend, looking to monetize offline customers and turn them into eager online devotees.

What Happened

A growing number of exchange-traded funds capitalize on the offline-to-online shift and the Direxion Connected Consumer ETF (NYSE: CCON) being the latest addition to the fray.

CCON, which debuted Tuesday, follows the Solactive Connected Consumer Index and adds to Direxion's expanding lineup of non-leveraged funds.

Why It's Important

The new CCON is backed by a four pillars methodology, similar to the one helping making the Direxion Work From Home ETF (NYSE: WFH) one of this year's most successful new ETFs, thematic or otherwise.

In the case of the rookie CCON, the four pillars are home entertainment, online education, remote health and wellness and social and virtual digital interaction.

“Companies are selected for inclusion in the index by ARTIS, a proprietary natural language processing algorithm, which uses keywords to evaluate large volumes of publicly available information, such as annual reports, business descriptions and financial news,” according to Direxion.

The aim is to turn up 40 stocks from online-driven industries with high compound annual growth rates (CAGR). Examples of such industries include esports, online education and telemedicine. Although it's a concentrated benchmark, CCON's underlying index reduces some of the risk associated with thematic strategies by not over-allocating to a particular industry. Rather, the index features 10 holdings from each of the aforementioned connected themes.

What's Next

There's no denying that CCON is a growth ETF. A third of its weight is allocated to communication services stocks while almost 55% of the remainder of the fund is devoted to consumer discretionary and technology names. Those three sectors are usually the cornerstones of growth strategies. Said another way, at a time when growth and momentum are leading factors, helped in large part by some of the very names residing in CCON, the new ETF could prove to be one of this year's more well-timed launches.

CCON's top 10 holdings combine for approximately 38% of the fund's weight. Those names include Twilio (NASDAQ: TWLO), Peloton (NASDAQ: PTON), Snap (NYSE: SNAP) and Amazon (NASDAQ: AMZN).

CCON, which is the eighth non-leveraged ETF rolled out by Direxion this year, charges 0.45% per year, or $45 on a $10,000 investment.


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