Internet Growth, Quality Dividends ETF Strategies Capturing New Trends

The coronavirus outbreak has upended the way Americans go about their everyday lives, but it has also caused many to go online, potentially strengthening the investment argument for a targeted Internet-themed exchange traded fund.

On a recent webcast, Mr. Wonderful himself, Kevin O’Leary, Chairman of O’Shares ETF Investments, discussed his take on the markets, what the current crisis means for small businesses, and where tech stocks aren’t telling the whole story on the workplace revolution.

O’Leary acknowledged that his investment decisions are changing due to this current global health crisis. As more people are choosing or forced to stay home, work in a home office, and shop at the comfort of their couch, the recent short-term shifts could lay the groundwork for long-term ramifications.

For instance, with lockdowns in effect and companies allowing workers to work from home, many firms are changing the way they run businesses. Companies that are more nimble and capable of capitalizing on this increasingly digital age have stood out.

Furthermore, more companies are growing more efficient in handling sales through an online outlet, potentially finding new ways to limit costs and maximize their businesses. This increased proficiency could further weigh on sectors like traditional brick-and-mortar retail as more companies realize the benefits of digitizing their business model.

Putting An Eye On OGIG

As a way to gain exposure to this rising trend, investors can look to a fund like the O’Shares Global Internet Giants ETF (OGIG). OGIG is a rules-based ETF designed to provide investors with the means to invest in some of the largest global companies that derive most of their revenue from the Internet and e-commerce sectors that exhibit quality and growth potential. Some of OGIG’s top portfolio holdings include companies such as Amazon, Alibaba Group, Google’s Alphabet, Tencent Holdings, Microsoft, and Facebook.

Not surprisingly, e-commerce is a major driver of long-term potential for OGIG and rival Internet ETFs. OGIG’s structure provides ample leverage to compelling domestic and international e-commerce trends. The fund’s e-commerce exposure is a major plus at a time when COVD-19 is dramatically altering the retail landscape, perhaps permanently. O’Leary believes that OGIG reflects a promising growth strategy for the next couple of years.

The COVID-19 outbreak has also forced many firms to tighten their belts and even cut dividends. However, this also goes to show the benefit of focusing quality companies with strong balance sheets that are capable of weathering this storm.

For instance, investors can gain diversified exposure quality dividend payers through something like the O’Shares FTSE US Quality Dividend ETF (NYSEArca: OUSA). The ETF follows three core investment principles: income, diversification, and capital appreciation. Component holdings have stable cash flow to pay dividends, are diversified across ten sectors to limit volatility and invest in quality companies with strong financial performances that may have a higher chance of appreciating over time.

Specifically, OUSA tracks large- and mid-cap dividend-paying issuers in the U.S. Additionally, the underlying FTSE US Qual / Vol / Yield Factor 5% Capped Index may implement screens on market capitalization, liquidity, high quality, low volatility and dividend yields to weed out riskier components and focus on dividend payers with a history of low volatility.

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