With social distancing and lockdown measures still in place within certain parts of the globe, the communications sector can continue to see strength with the reliance on technology like Zoom to facilitate interaction. This could give traders an opportunity to boost the Direxion Daily Communication Services Index Bull 3X Shares (NYSEARCA: TAWK) ETF.
“Over the past several months, the communications sector has grown in prominence in the portfolios of investors around the world,” wrote Casey Murphy in an Investopedia article. “Due to the number of people suddenly working and staying home due to the COVID-19 pandemic, demand for products and services in this sector will likely remain strong for many months to come.”
Investors who want broad exposure to the sector can give Communication Services Select Sector SPDR Fund (XLC) a peep. The fund seeks to correspond generally to the price and yield performance of publicly traded equity securities of companies in the Communication Services Select Sector Index.
Normally, the fund generally invests substantially all, but at least 95%, of its total assets in the securities comprising the index. The index includes companies that have been identified as Communication Services companies by the GICS®, including securities of companies from the following industries: diversified telecommunication services; wireless telecommunication services; media; entertainment; and interactive media & services.
Leveraged ETF Exposure to Communications Sector
Whether traders see the half glass empty or the half glass full, they can trade either side with this pair of communications sector exchange-traded funds (ETFs). For bulls, there’s TAWK and for bears, there’s the Direxion Daily Communication Services Index Bear 3X Shares (MUTE).
TAWK seeks daily investment results equal to 300 percent of the daily performance of the Communication Services Select Sector Index. The index includes domestic companies from the communication services sector, which includes the following industries: diversified telecommunications services, wireless communication services, media, entertainment, and etc.
With the transparency and liquidity of an ETF wrapper that incorporates multiple hedge fund strategies, funds like TAWK opens up the arena to all types of investors irrespective of net worth. In addition, the communications sector can be used as a defensive maneuver amid the coronavirus outbreak, making TAWK a good option that’s not relegated to just leverage-hungry traders.
MUTE follows the same index but provides traders with inverse exposure–also with 3x leverage. If the communications sector does suffer from bumps and bruises during the helter-skelter of the first quarter, this inverse option could serve traders well.
For more market trends, visit ETF Trends.