For this week’s episode of ETF 360, ETF Trends CEO Tom Lydon and CIO Dave Nadig spoke with David Mazza, Managing Director and Head of Product at Direxion, about the state of travel and working from home for various firms and what that says about the market.
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When looking at how travel has been going since things have opened back up to a fuller capacity, Mazza notes how the industry has recovered due primarily to leisure. When surveying business, however, whether it’s advisors or corporations, there’s a lot of support for accomplishing things virtually, and clients are happy to go along with it, as the connectivity is still there.
Mazza continues, “I think this idea of hybrid work, where folks are in the office part of the time, and their homes the other part of the time, is probably the future. And we can get away from the notion of needing to be in the office 24/7 or being in your pajamas 24/7, potentially not working.”
This is a good lead into the success of the Direxion Work From Home ETF (WFH), which launched in June of 2020, and has been up 50% since then. As far as how well the companies involved can do currently, given this current hybrid discussion, Mazza notes how WFH’s outperformance of the broader market is showing how, quarter after quarter, these companies are showing revenue growth. It’s a bit less compared to when it first started; however, companies are investing in these types of solutions.
WFH has a focus on technology and thematic areas that are having an impact. “In many cases, this is not actually a trade. This is becoming a long-term theme that is just beginning to play out,” Mazza adds.
As Lydon notes, looking at the stocks in this portfolio, their nature in relation to the S&P 500 means there are a few of the FAANG stocks to rely on as holdings. However, as Mazza explains, the portfolio is equal-weighted. At rebalance, every stock can see the contribution be less focused on how large they are, and more focused on the growth that they are multiple and the development of their earnings.
“What I think is unique is a lot of these names could have the potential to be the next FAANGs because what they’re doing is transforming the way businesses happen,” Mazza notes.
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