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Fearing 2nd Wave of Coronavirus? Bet on Stay-at-Home ETFs

Sweta Jaiswal, FRM
·4 min read

Globally, the fears of a resurgence of coronavirus are spooking investors. In fact, China and Germany have taken the initiative to reimpose some lockdown measures in areas where the emergence of new cases are being observed. Meanwhile, states like Florida, Carolinas, Texas and Arizona are seeing increasing number of hospitalizations every day and are apprehending widespread community transmission (per a CNN report). Also, the new model suggests that Florida has “all the markings of the next large epicenter" of the coronavirus outbreak, per a CNN report. The fears worsened when the United States reported more than 25,500 new coronavirus cases and a death toll of around 755 on Jun 17.

The effect of the concerns over rising coronavirus cases was visible on the Wall Street, where Dow Jones Industrials Average index lost 0.7% and the S&P 500 declined 0.4%. However, it was also observed that stocks like Amazon, Netflix and Google-parent Alphabet that mostly rallied during the pandemic-induced lockdowns, actually gained in yesterday’s trading session. Meanwhile, stocks like United Airlines and Nordstrom that surged following the reopening of the economy lost ground in yesterday’s trading session.

In such a scenario, let’s look at some ETF areas that can gain as people will try to minimize human-to-human contact:

Work-From-Home Trend

In the current scenario, people will try to maintain social distancing and work remotely. Resultantly, cloud computing is a key technology in the fight against coronavirus. It is supporting organizations in remotely processing a lot of information, developing and running key applications and services, and also helping employees across the world collaborate while working.

Kate Lister’s, president of Global Workplace Analytics, take on the current situation highlights the growing preference for working from home. In this regard, she said that, “seventy-seven percent of the workforce say they want to continue to work from home, at least weekly, when the pandemic is over. Twenty-five to thirty percent of the workforce will be working-from-home multiple days a week by the end of 2021,” per a Forbes article. Large employers like Twitter and Facebook have allowed their employees to work from home.

Against this backdrop, investors can look at the following ETFs that can gain from the trend -- First Trust Cloud Computing ETF SKYY and Global X Cloud Computing ETF CLOU (read: What Awaits Cloud ETFs As Zoom's Fame Begins to Fade?).

Online Shopping Trend

In the crisis, people prefer to stay indoors and shopping online for all essentials, especially food items. With online retail seeing a spurt in sales, it is benefitting companies like Amazon and Walmart, among others. In fact, Walmart recently teamed up with Shopify Inc. to open its Walmart Marketplace to sellers of the latter.

According to a Total Retail article, e-commerce sales are expected to grow more than 20% this year as there is an increasing number of first-time online shoppers. Against this backdrop, the following ETFs can benefit from the new shopping trend -- Amplify Online Retail ETF IBUY, ProShares Long Online/Short Stores ETF CLIX and ProShares Online Retail ETF ONLN (read: 5 Sector ETFs Beating the Market in Q2).

Rising Digital Payments

In line with the rising online shopping trend, customers are resorting to digital payments to clear their bills, while merchants and utility providers are advocating the same.According to a new Crowdfund Insider research, in May, 50% of U.S. consumers reportedly availed of contactless payment methods at least four times, with 69% agreeing that this mode is more convenient than cash transactions. Also, three-fifth of U.S. consumers confirmed that these hassle-free digital payments will urge them to continue with the process, even in the post-COVID world.

Per Statista, total transaction value in the Digital Payments segment should see 15.3% year-over-year growth rate in 2020 on a 5.4% rise in users. In view of this, investors can tap ETFs like ETFMG Prime Mobile Payments ETF IPAY, Tortoise Digital Payments Infrastructure ETF TPAY and Global X FinTech ETF FINX.

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Amplify Online Retail ETF (IBUY): ETF Research Reports
ETFMG Prime Mobile Payments ETF (IPAY): ETF Research Reports
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
Global X FinTech ETF (FINX): ETF Research Reports
ProShares Long OnlineShort Stores ETF (CLIX): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
Tortoise Digital Payments Infrastructure ETF (TPAY): ETF Research Reports
Global X Cloud Computing ETF (CLOU): ETF Research Reports
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Zacks Investment Research
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