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Study Indicates Work From Home ETF Could Have Ample Staying Power

January 22, 2021 8:15 am
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Study Indicates Work From Home ETF Could Have Ample Staying Power

Last year, approximately 300 new exchange traded funds debuted – another all-time record. Many of 2020's crop of rookie ETFs are classified as thematic funds and some of those were born directly as a result of the coronavirus pandemic.

What Happened

The issue some market observers take with ETFs created in response to the pandemic is, well, the pandemic is eventually going to be a thing of the past. Hopefully sooner than later. Critics assert that when COVID-19 is a thing of the past, the utility of ETFs created in response to it could be limited.

In some cases, that could prove true, but it's unlikely to be the case with the Direxion Work From Home ETF (NYSE:WFH).

Why It's Important

WFH debuted last June and has nearly $147 million in assets under management, making it one of more successful thematic funds to come to market in 2020. That's a solid start and, more importantly, WFH returned a stellar 30.15% over thee past six months.

Still, critics say many employees that are currently working remotely will eventually return to offices, potentially dragging on the WFH case. Good news: That forecast may not prove accurate.

“Our survey evidence says that 22 percent of all full work days will be supplied from home after the pandemic ends, compared with just 5 percent before,” according to the Becker Friedman Institute for Economics at the University of Chicago.

WFH focuses on the following quartet of sub-themes: Cloud Technologies, Cybersecurity, Online Project and Document Management, and Remote Communications. While there are certainly links between those concepts and working from home, none of those industries are dependent on the elimination of office work.

In particular, cloud computing and cybersecurity were booming for several years before the pandemic, indicating those industries don't need a health crisis to prosper.

What's Next

Data from the University of Chicago indicate market participants shouldn't be quick to dismiss the efficacy of WFH in a post-pandemic world.

“First, high-income workers, especially, will enjoy the perks of working from home,” according to the study. “Second, we forecast that the postpandemic shift to working from home will lower worker spending in major city centers by 5 to 10 percent. Third, many workers report being more productive at home than on business premises, so post-pandemic work from home plans offer the potential to raise productivity as much as 2.4 percent.”

WFH is up 6% over the past month and 2.67% to start 2021.

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