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3 New Coronavirus-Themed ETFs to Hog Attention in 2H

Sanghamitra Saha

The first half of 2020 was all about the outbreak of coronavirus in late January and its rapid spread to the various parts of the world by the end of the first quarter. No wonder, Wall Street snapped its longest bull run ever in March and went on to record its worst quarter since fourth-quarter 2008 (read: Top ETF Stories of First Quarter).

However, unprecedented stimulus measures by global central banks and governments pulled the ailing global markets out very soon from nadir. As a result, global stocks rallied in early Q2. But the final month of 1H i.e. June remained subdued for Wall Street on fears of a second wave of coronavirus thanks to the reopening of economies.

The net result is a growing number of U.S. states reissuing social distancing standards in the past week to curb the increase in coronavirus cases. California ordered bars to re-close in seven counties including Los Angeles. The state followed Texas and Florida that last week mandated their bars to be shut for now.

What Lies Ahead in 2H?

Along with the United States, several other corners of the globe are seeing the same trend.Meanwhile, the IMF estimates shrinkage of 4.9% in global GDP in 2020, down from 3% in April. That would mark the worst annual contraction since immediately after World War II.

The overall number of global coronavirus cases has increased to more than 10.1 million, while deaths have risen to more than 500,000, according to the Johns Hopkins University. The trend is showing no sign of deceleration. This makes it clear that the coronavirus threat will be rife in the second half of 2020.

As a result, coronavirus-focused investing is likely to rule in 2H. No wonder, some issuers have launched specific COVID-19-focused ETFs in recent weeks. Those products either deal with a COVID-19-induced lifestyle or the pharma sector.

As far as life-style goes, the stay-at-home trend across the globe put the work-and-learn-from-home strategy in place. At least, the service and education sectors are mitigating the economic and social impact of the pandemic in this manner. While the fear of a second wave has now taken markets in its grip, the work-from-home policy will likely remain in place over the long haul.

Coming to the pharma sector, efforts for producing vaccines and medication for COVID-19 are now at sky-high levels. The World Health Organization has recognized some 10 prime candidates for potential vaccines as these have entered clinical trials. Plus, 114 vaccine candidates are in preclinical evaluation stage. The companies that are frontrunners in the vaccine race are Moderna Inc. (MRNA), INOVIO Pharmaceuticals (INO) and Novavax(NVAX).

Against this backdrop, below we highlight three coronavirus-focused new ETFs that may gain considerable assets in 2H.

Direxion Work From Home ETF WFH

The fund hit the market on Jun 25, 2020. The fund tracks the Solactive Remote Work Index, which comprises 40 U.S. listed securities and ADRs that have considerable exposure to companies that specialize in providing work-from-home-friendly products. The areas are remote communications, cyber security, project and document management, and cloud technologies. The expense ratio of the fund is 0.45% (read: Coronavirus Investing: Pureplay Work-From-Home ETF Hits Market).

Twilio (4.17%), Inseego (3.95%) and Crowdstrike Holdings (3.76%) are the top three holdings of the fund. Software takes about 63.33% of the fund while IT Services (12.73%) and Communications Equipment (8.73%) round out the top three positions.

ETFMG Treatments Testing and Advancements ETF GERM

The fund, which hit the market in Jun 17, gives direct exposure to the biotech companies directly engaged in the testing and treatments of infectious diseases. Focused on advancements with targeted exposure to R&D, vaccines, therapies and testing technologies. The 56-stock fund charges 68 bps in fees. Inovio Pharmaceuticals (6.7%), Alnylam Pharmaceuticals (5.97%), Novavax (5.9%) and Moderna (5.32%) are the top holdings of the fund.

Pacer Biothreat Strategy ETF VIRS

The fund hit the market in late June. It follows the LifeSci BioThreat Strategy Index, which invests in U.S.-listed companies whose products or services help to protect against, endure or recover from biological threats to human health. Nvidia, Amazon and Netflix are the top three holdings of the fund. The fund charges 70 bps in fees.

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