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Are COVID-Themed ETFs Back in Focus as Delta Variant Fears Rise?

·5 min read

The number of coronavirus cases is rising in the world’s largest economy. Investors now seem worried about the sustainability of the U.S. economic recovery from the pandemic-led slump.

The new cases arising from the delta variant are being mostly observed among the unvaccinated population. Going by the US Centers for Disease Control and Prevention (CDC) data, the world’s largest economy is seeing about 26,000 daily cases in the last seven days, rising by more than double the average from a month ago, as mentioned in a CNBC article.

Around 83% of sequenced samples in the United States have been found to belong to the highly contagious delta variant, according to CDC Director Dr. Rochelle Walensky, per a CNN report. Dr. Walensky has also said in a Senate committee hearing that "This is a dramatic increase, up from 50% for the week of July 3," according to the same CNN report.

Going on, health experts have claimed the delta variant to be twice as infectious as the original COVID-19 strain, according to the verified sources. In fact, there is a 66% increase in average of new daily cases this week in comparison to last week. Also, the metric has risen 145% from two weeks ago as cases increase in 46 states, per data from Johns Hopkins University and a CNN article. Hospitalizations rate has also surged 26% from the previous week, per the same CNN article.

The recently published CDC data also highlights that around 22% of the U.S. population, coming to about 73 million, lives in a county which is believed to have "high" COVID-19 transmission. A county is observed to have high transmission by the CDC if there have been 100 or more cases of COVID-19 per 100,000 residents or a test positivity rate of 10% or above in the past seven days, per a CNN report.

Two U.S. athletes, Kara Eaker (a member of the U.S. gymnastics team) and Katie Lou Samuelson (a member of the U.S. Olympic 3x3 women's basketball team) have tested positive for coronavirus almost before the start of the Tokyo Olympics, per a CNN report.

The resurging cases have frightened investors as they fear that implementation of new lockdown measures to control the spread may hurt the global economic recovery achieved so far, following the reopening of economies. In particular, stocks that were gaining from the re-opening economy belonging to sectors like travel, energy, industrial, materials and retail are likely to be impacted.

The energy sector bled profusely owing to the pandemic-induced historically low oil price levels, thanks to the dual blows of low demand and surplus supplies. Notably, a surge in coronavirus cases may also weigh on oil demand.

COVID-Themed ETFs That May Gain

It feels like the rest of 2021 will continue to bear the brunt of the pandemic blues, before majority of Americans are vaccinated and therefore, a COVID-themed ETF could be a smart pick. Against this backdrop, there have been some launches,keeping the pandemic in focus:

Direxion Work From Home ETF WFH

Launched on Jun 25, 2020, this fund seeks investment results, before fees and expenses, that track the Solactive Remote Work Index. It offers exposure to companies across four technology pillars, allowing investors to gain exposure to those firms that stand to benefit from an increasingly flexible work environment. The four pillars include Cloud Technologies, Cybersecurity, Online Project and 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. It charges a fee of 45 basis points (bps) a year (read: Delta Variant to Spark Rally in Stay-At-Home ETFs).

Global X Telemedicine & Digital Health ETF EDOC

This fund was launched on Jul 29, 2020. It seeks to invest in companies positioned to benefit from advancements in the field of telemedicine and digital health. This includes companies involved in Telemedicine, Health Care Analytics, Connected Health Care Devices, and Administrative Digitization. The fund charges a fee of 68 bps a year (read: Power-packed ETFs for Your Portfolio in 2021).

Global X Education ETF EDUT

Launched on Jul 10, 2020, the fund seeks to invest in companies, providing products and services that facilitate education, including online learning and publishing educational content as well as those involved in early childhood education, higher education, and professional education. It charges a fee of 50 bps a year.

Pacer BioThreat Strategy ETF VIRS

The fund debuted on Jun 24, 2020, and seeks to gain exposure to U.S. companies, which in their normal operations, provide goods and services to the market through accomplishing one or more of the seven index themes. It charges a fee of 70 bps a year (read: Netflix Q2 Earnings Put These ETFs in Focus).

ETFMG Treatments Testing and Advancements ETF GERM

Launched on Jun 17, 2020, the fund is designed to provide exposure to biotech companies directly engaged in the testing and treatment of infectious diseases. Focused on advancement with targeted exposure to the forefront of R&D, vaccines, therapies and testing technologies. It charges a fee of 68 bps a year (read: Novavax ETFs to Shine Bright on Positive Vaccine Update).

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ETFMG Treatments, Testing and Advancements ETF (GERM): ETF Research Reports
 
Direxion Work From Home ETF (WFH): ETF Research Reports
 
Pacer BioThreat Strategy ETF (VIRS): ETF Research Reports
 
Global X Education ETF (EDUT): ETF Research Reports
 
Global X Telemedicine & Digital Health ETF (EDOC): ETF Research Reports
 
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Zacks Investment Research