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Vaccine Developments Don't Dent Case For Work From Home ETF

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Vaccine Developments Don't Dent Case For Work From Home ETF

The Direxion Work From Home ETF (NYSEARCA: WFH) is barely more than three months and already credibly lays claim to being one of the most impressive new exchange-traded funds to debut this year.

What Happened

WFH is off its recent highs due in part to conjecture about a coronavirus vaccine. Specifically, traders are pinning their hope on the possibility that not only will a vaccine be approved soon, but also that it will be widely available once it is approved and life will swiftly return to normal.

That's a lot to hope for without a lot of evidence, perhaps indicating WFH's recent weakness is more a case of too much too soon and a buying opportunity with the new ETF than anything else.

“While analysts have debated whether the surge in prices represents a bubble in the biotech industry or if the high valuations simply reflect the value of a potentially $30 billion vaccine market, there still remains a good amount of time between now and a final approved vaccine (or vaccines),” according to Direxion research. “The most optimistic projections from executives with Moderna (NASDAQ: MRNA) and Pfizer (NYSE: PFE) have Phase 3 trial results coming out sometime in October. While that might represent a new catalyst for the industry, there’s no telling what the results will indicate for the leading vaccine candidates or the industry as a whole.”

Why It's Important

WFH rapidly amassed over $100 million in assets under management, an undoubtedly impressive feat for any ETF of its age. That quick asset-gathering acumen suggests some investors are comfortable wagering WFH, although it was born during pandemic, has utility beyond it.

“The U.S. Director of the National Institute of Allergy and Infectious Diseases Dr. Anthony Fauci has said he doesn’t expect a vaccine to reach patients until early 2021, at the soonest,” notes Direxion. “But even in that timeline there remain questions of efficacy and tolerability questions that will weigh on the approval process and could spell opportunity or catastrophe for the many small biotech firms racing for a vaccine.”

Additionally, working from home could prove to be one of the more durable trends resulting from the pandemic. It boosts productivity, lowers companies' real estate costs and reduces emissions. Regardless of the COVID-19 vaccine timeline, those are all positives for companies and employees.

What's Next

Obviously, there are no guarantees, but WFH can ride out vaccine speculation and even thrive after one comes to market.

“For longer term investors, that means the work from home and connected consumer space may continue to be the theme to ride well into 2020,” notes Direxion.

 

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