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Direxion Debuts CCON ETF, Expands COVID-19-Themed Product Base

Sweta Jaiswal, FRM

This year has been largely dominated by the coronavirus outbreak so far. Timing the launch correctly, Direxion recently introduced the Direxion Connected Consumer ETF (CCON). With the launch, the issuer has strengthened its suite of COVID-19-themed ETFs, as it follows the roaring success of the Direxion Work From Home ETF WFH, which has crossed $90 million in AUM since its debut on Jun 25.

The coronavirus outbreak continues to expand globally as the total number of cases has crossed 24 million, according to Johns Hopkins University. Meanwhile, more than 5.8 million coronavirus cases have been registered in the United States with a death toll of at least 179,000. Per a CNN report, even though the number of new cases in the United States is going down, there may be new hot spots within the country where the outbreak could still aggravate.

In such a scenario, it feels like the second half of 2020 will continue to bear the brunt of the coronavirus outbreak and therefore, a COVID-19-themed ETF could be a smart pick.

CCON in a Nutshell

This fund seeks investment results, before fees and expenses, which track the Solactive Connected Consumer Index. It provides exposure to companies across four technology pillars, allowing investors to capture those companies that stand to gain from consumers connecting to products and services in new ways, especially virtual ones. The four pillars include Home Entertainment, Online Education, Remote Health and Well-Being, and Virtual and Digital Social Interaction.

The companies are chosen 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, per Direxion.

According to David Mazza, Managing Director at Direxion, "CCON meets the demand of investors looking to gain diversified exposure to firms providing the services and technologies to help revolutionize home entertainment, enable the scalability of remote education, allow people to lead healthier lives, and keep the world connected, even when apart."

The fund charges a fee of 45 basis points (bps) a year.

What Makes CCON an Attractive Pick?

This health crisis has forced people to maintain social distancing and work remotely.  Strikingly, even as the rebooting of the U.S. economy happens in phases and social-distancing restrictions are being eased, people are increasingly opting for contactless operations. It’s largely because the pandemic has brought about some changes in lifestyle and influenced Americans’ preferences.

More and more people are spending time at home, in keeping with social-distancing guidelines due to the pandemic. Going by Nielsen’s latest Total Audience Report, as of this year’s second quarter, streaming accounts for one-fourth of all television minutes viewed. It shows an increase from the 19% share of TV minutes that streaming accounted for in fourth-quarter 2019. Also, per Direxion’s press release, around 3.6 billion people used social media globally in 2020 and are expected to rise to almost 4.4 billion in 2025.

Telemedicine and Digital Health are receiving significant importance through the pandemic. With a large amount of the global population under stay-at-home orders, technology-based tools that enable remote communication with doctors and allow patient monitoring have become popular. Direxion noted that annual revenues in telemedicine market are expected to grow by 64.3% in 2020 and see a CAGR of 38.2% by 2025.

Other COVID-Themed Launches

In the current scenario of the rising work-from-home and online shopping trends, online learning, increasing digital payments, growing video streaming and soaring video game sales are slowly becoming the “new normal.”  Against this backdrop, there have been some launches keeping the pandemic in focus:

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 further advances 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.

Global X Education ETF EDUT

Launched on Jul 10, 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 and seeks to gain exposure to U.S. companies that, 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: ETFs to Watch Post Stellar Q2 Earnings From Nvidia).

ETFMG Treatments Testing and Advancements ETF GERM

Launched on Jun 17, the fund is designed to give 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: Moderna ETFs to Shine on U.S. Contracts for Coronavirus Vaccine).

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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
 
ETFMG Treatments, Testing and Advancements ETF (GERM): ETF Research Reports
 
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