Perhaps one day in the future, when COVID-19 is defeated, investors will look back on the pandemic and see some positive rays of light.
What Happened: One of the positives may turn out to be increased choice in the thematic exchange-traded funds space as the coronavirus pandemic is spurring the launch of an array of ETFs with ties to the crisis. The thing is many of these new ETFs have singular focuses, be it vaccine development, working from home or telemedicine.
The newly minted ProShares MSCI Transformational Changes ETF ANEW offers pandemic investing.
ANEW, which debuted last week, tracks the MSCI Global Transformational Changes Index, providing exposure to four transformational changes: Future of Work, Genomics & Telehealth, Digital Consumer, and Food Revolution.
Why It's Important: Each of the four transformational changes receive weights of 25% within ANEW and individual holdings are capped at weights of 2%, reducing single equity risk.
“Consider the big picture: use of commercial robots almost tripled to 2.7 million over the past decade, the cost of sequencing a human genome has dropped 99% in 15 years, and e-commerce grew at an annualized rate of 82% in 2020—these are dramatic changes,” says Scott Helfstein, Executive Director, Thematic Investing at ProShares. “The way we behave as workers and consumers is changing—accelerated by COVID-19—and investors should pay attention to the companies evolving to meet these challenges.”
Seven sectors represent the quartet of transformational changes in ANEW with health care, technology and communication services stocks combining for over 72% of the rookie ETF's weight.
The 143 components in ANEW's index have an average market capitalization of almost $103 billion and trade at 33.17x earnings, confirming the new ProShares fund is a large-cap growth offering.
What's Next: ANEW's health care and work from home exposures could be particularly compelling for investors today and after COVID-19 is vanquished.
“The global telemedicine market is projected to reach $155 billion by 2027, according to an April 2020 Grandview Research report,” notes ProShares. “Innovation in genomics and medical research are resulting in diagnostic and therapeutic breakthroughs.”
The fund also taps into the scorching hot e-commerce theme.
“eMarketer estimates that e-commerce sales may soar to $6 trillion in the same time frame, according to a study from June 2019,” according to ProShares.
Well-known components in the new ETF include Apple AAPL, Amazon AMZN and Netflix NFLX.
ANEW charges 0.45% per year, or $45 on a $10,000 investment.
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