Education is big business and a thematic investment proposition and where those traits reside, an exchange-traded fund usually isn't far behind.
What Happened? That ETF arrived Tuesday in the form of the Global X Education ETF (NASDAQ:EDUT). EDUT, which tracks the Indxx Global Education Thematic Index, is the third new ETF launched by Global X in less than a month.
The new ETF's 34 holdings include companies involved in “online learning and publishing educational content, as well as those involved in early childhood education, higher education, and professional education,” according to the issuer.
Why It's Important: Indeed, EDUT is yet another thematic ETF, but the theme it taps into is credible and highly important. That being the evolving workforce demands students and workers to constantly update their skills and credentials.
“The skillsets employers demand is evolving quickly and will likely continue to – the Institute for the Future estimates that 85% of the jobs today’s students will have in 2030 don’t exist yet,” said Global X in a research note. “The surging value of education in the workforce is driving strong growth across the global industry, with revenues expected to rise from $6T in 2020 to $10T in 2030.”
EDUT features exposure to six industries. While higher and professional education is the largest of those at a weight of 25.21%, EDUT shows it's built for the current environment of increased online education with a combined weight of more than 46% to online learning companies and video communications providers.
“According to an EY-Parthenon survey conducted at the height of the pandemic, 70% of students reported using third-party technology solutions to continue their education at home,” notes Global X. “While we believe social distancing will remain a consistent theme even after the pandemic runs its course, these technologies are appealing for reasons beyond idiosyncratic events.”
What's Next? Time will tell if EDUT adds to the expansive list of successful Global X thematic ETFs, but it's clear the way education is delivered is shifting. The coronavirus pandemic is simply moving that transition
along. Additionally, the rapidly evolving labor market demands workers have fresh skills.
“The global labor market is becoming more competitive as automation technologies like robotics and artificial intelligence and larger pools of candidates to hire from shape it as skills-centric,” according to Global X. “At the same time, governments and individuals strive to maintain high employment and improve the quality of life. Investments in human capital through education and training could prove critical in balancing these dynamics. Investors can play a part in this.”
EDUT charges 0.50% per year, or $50 on a $10,000 investment.
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