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Play These ETFs to Combat the Surging Coronavirus Cases

Sweta Jaiswal, FRM
·6 min read

The total number of coronavirus cases has crossed the grim mark of 56 million globally. Notably, the world’s largest economy has seen more than 11 million cases alone. In fact, a new high of more than 80,600 hospitalized patients nationwide was reported in the United States on Nov 19, according to the COVID Tracking Project (per a CNN report). In addition, with more than 187,800 new cases being reported across the country, another record of the highest one-day total was observed the same day.

The University of Washington's Institute for Health Metrics and Evaluation (IHME) has also raised its coronavirus death forecast considerably, according to a CNN report. It now expects a total of 471,000 American deaths by Mar 1, 2021, increasing more than 30,000 since the previous forecast released about a week back. In fact, by Dec 18, more than 2,300 Americans could be losing their lives daily, per the same group.

As a result of the rising coronavirus cases in the United States, various social-distancing measures are being undertaken, along with imposing partial lockdowns to control the spread. In California, Governor Gavin Newsom has informed about a limited Stay-at-Home order that will be imposed effective Saturday for the counties that come under the state's most restrictive tier, per a CNN report. These include Los Angeles County, San Diego County, Riverside County, Orange County and Sacramento County, making for about 94% of California's population. A state-wide curfew is also now in effect in Ohio, going by the above-mentioned report.

In Arkansas, the governor has made it mandatory to close all businesses that are licensed to sell and allow consumption of alcohol on premises by 11 p.m (per a CNN report). Going by the same report, the latest directive will be effective from Nov 20 and last until Jan 3, and include restaurants and bars as well as private clubs with "on premise" permits. The Centers for Disease Control and Prevention has also advised Americans against traveling for Thanksgiving due to the ongoing health crisis, per a CNBC article.

In this regard, Tom Essaye, founder of The Sevens Report, has said “negative COVID headlines/increased economic lockdowns (especially in NYC and LA County) are starting to offset vaccine optimism, and that’s weighing on stocks. We are now facing the biggest number of economic restrictions since the spring, and that will weigh on economic growth and, potentially, earnings,” according to a CNBC article.

Under the prevalent scenario of the surging work-from-home and online shopping trends, increasing digital payments, growing video streaming and soaring video game sales are gradually becoming the “new normal.” With the new trends making way, a few major technology stocks are expected to keep gaining traction from the buoyancy in demand for their products and services.

Evidently, cloud computing has emerged as a key technology in the fight against coronavirus. Keeping up with the digitization trend, the upcoming U.S. holiday season is anticipated to see a significant surge in online sales. Going by the latest forecast from software provider Salesforce.com, a 34% year-over-year (nearly triple from the last year’s growth) jump is expected in online holiday sales in the United States (per a Digital Commerce 360 article). Per the same article, digital sales are expected to account for around 30% of seasonal spending.

It seems like there is no stopping video game players this year, with the health crisis forcing people to stay indoors. Moreover, the boom in the video gaming space will likely sustain in the post-pandemic era as the health crisis has changed the lifestyle and preferences of Americans to a large extent.

ETFs to Watch Out For

Against this backdrop, here we present some ETFs from the e-commerce, technology and consumer discretionary sectors that will continue gaining from the worsening outbreak due to the “new normal” trends.

First Trust Cloud Computing ETF SKYY — up 41.5% so far in 2020

This fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the ISE Cloud Computing Index. It holds 64 stocks in its basket and charges investors 60 basis points (bps) in fees per year. The product has amassed $5.28 billion in its asset base. It sports a Zacks ETF Rank #1 (Strong Buy) with a Medium-risk outlook (read: ETF Strategies to Play as the Coronavirus Outbreak Aggravates).

Global X E-commerce ETF EBIZ — up 64%

This fund invests in companies positioned to benefit from the increased adoption of e-commerce as a distribution model, including companies whose principal business is in operating e-commerce platforms, providing related software and services, and/or selling goods and services online. It has accumulated $108.7 million in its asset base and charges 50 bps in annual fees (read: Wayfair Surges Post Earnings: ETFs to Play).

ProShares Online Retail ETF ONLN — up 88.4%

The fund seeks investment results, before fees and expenses, that track the performance of the ProShares Online Retail Index. With an AUM of $711.9 million, the fund has an expense ratio of 58 bps (read: ETFs in Focus on Alibaba's Strong Fiscal Q2 Earnings).

Roundhill Sports Betting & iGaming ETF BETZ — up 39.9%

This ETF debuted in early June and has already attracted $144.3 million in AUM. This ETF is designed to offer retail and institutional investors global exposure to sports betting and iGaming industries by tracking the Roundhill Sports Betting & iGaming Index. The fund charges 75 bps in annual fees (read: Sports Betting ETFs, Stocks to Surge on More Legalization).

Global X Video Games & Esports ETF HERO — up 68.6%

The fund seeks to invest in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports leagues, or produce hardware used in video games and esports, including augmented and virtual reality. With an AUM of $441.1 million, the fund charges 50 bps points in expense ratio (read: Bet on 3 ETFs to Play "New Super Cycle" for Video Games).

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Global X Video Games & Esports ETF (HERO): ETF Research Reports
 
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
 
ProShares Online Retail ETF (ONLN): ETF Research Reports
 
Global X Ecommerce ETF (EBIZ): ETF Research Reports
 
Roundhill Sports Betting & iGaming ETF (BETZ): ETF Research Reports
 
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Zacks Investment Research
 
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