Market Overview

Work From Home ETF Zooms Into $100 Million Territory

Work From Home ETF Zooms Into $100 Million Territory

Add the Direxion Work From Home ETF (NYSE: WFH) to the list of rookie thematic exchange-traded funds that are excelling right out of the gates.

What Happened

WFH is the latest ETF that's just around three months old to join the prestigious $100 million in assets under management club, entering that group on Tuesday. That confirms at least two important points.

First, WFH was a well-timed launch. Second, and more importantly, advisors and investors believe in the work from theme and as the first ETF to address that theme, WFH is being rewarded.

Why It's Important

WFH, which has a few weeks left before its official three-month anniversary, follows the Solactive Remote Work Index. That benchmark isn't just a hodgepodge of technology stocks. It's rooted in four “pillars” related to remote work: cloud computing, cybesecurity, online document management and remote communications.

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

That's all fine and dandy, but what's really important with thematic ETFs, WFH included, is that these funds address themes with long-term viability. A WFH critic may be apt to say “Hey, employees are going to head back to the office after COVID-19 is defeated.”

Maybe. Maybe not. In fact, plenty of signs point to WFH being a viable long-term play.

What's Next

Plenty of big-name companies are looking to fill remote roles and plenty of employees are finding they enjoy the home office life. It's no wonder so many market observers are concerned about the fate of office real estate in this country. That's a win/lose scenario whereby the winners are clearly some WFH components.

Adding to the long-term thesis for WFH are studies confirming that home workers are more productive and take less time off. With many companies looking to assert their environmental stewardship, home-based staff is an easy box to check that box because with a reduced number of employees commuting to an office, the carbon footprint is dramatically reduced.

WFH allocates almost 89% of its weight to tech stocks – a fine overweight to have in 2020. It's top 10 holdings include Twilio (NYSE: TWLO), Okta (NASDAQ: OKTA) and, yes, Zoom Video Communications (NASDAQ: ZM). After gaining 4% yesterday on above-average volume, WFH is up 15.74% since inception.


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