Investors can consider targeted exchange traded funds strategies to take advantage of how COVID-19 is accelerating changing behaviors.
In the recent webcast, Accelerating Natural Selection. Investing in a Post-COVID World Economy, David Mazza, Managing Director, Product, Direxion, pointed out that working at home has already been occurring over the years, but the coronavirus pandemic and subsequent Great Shutdown only accelerated the trend. Prior to the COVID-19 pandemic, 5.7% of US employees worked entirely from home. About 43% of employed Americans already spend at least some time working remotely, and 8 million U.S. workers already work at home full-time. Looking ahead, 75% of Fortune 500 CEOs say they plan to accelerate the technological transformation of their companies, and about 54% of companies plan to make a remote work option permanent.
The remote work theme may also be an excellent way to recruit workers moving forward. According to a recent Deloitte survey, 43% of millennials were allowed to work from home or other locations, but 75% would prefer to work remotely either completely or partially. According to an International Workplace Group’s (IWG) survey, 80% of respondents claimed that when faced with two similar employment offers, they would turn down those that did not offer flexible working.
The push toward remote work may also benefit businesses. According to IWG, 65% of business leaders surveyed believed a flexible workspace reduces both capital and operational expenditure, manage risk, and consolidate their portfolio. Furthermore, 85% of the respondents stated that productivity increased as a result of greater flexibility.
To help investors home in on this developing trend, Sylvia Jablonski, Managing Director, Head of Capital Markets & Institutional Strategy Team, Direxion, highlighted four established and emerging technological pillars enabling remote work, including:
- Cloud Technologies. Due to the need for data to be securely stored, accessed, and shared remotely, companies offering cloud technology services and on-demand availability to computer systems may benefit.
- Cybersecurity. More flexible workspaces open the potential for increased cyber threats that likely increases the demand for companies offering cybersecurity systems.
- Online Project and Document Management. Remote work requires applications that enable the management of projects and collaboration across individuals and teams, boosting the need for tools that enable this to occur efficiently and securely.
- Remote Communications. With workers in sporadic locations, the need for videoconferencing, instant messaging and email applications will increase, so that coworkers can be connected even when not together physically.
The recently launched Direxion Work From Home ETF (WFH) offers access to companies across these four technology pillars, allowing investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment.
Jablonski also underscored the increasing trend of a more connected consumer in this digital age. For example, 75% of customers added additional streaming subscriptions and/or connected devices during the periods of lockdown. The global online education market is expected to reach approximately $132.98 billion by 2023, growing at a CAGR of 28.55% from 2017 to 2023. Telemedicine is forecast to grow by 64.3% in 2020, and that the category will have a 5-year CAGR of 38.2% by 2025, with 2/3 of consumers considering telemedicine in the future and 1/4 only considering it as an option prior to COVID-19. About 47% of users increased social media usage, compared to 16% reporting declined usage during US lockdown periods, and social media engagement increased by 61% in the later stages of the pandemic when compared to normal usage rates. Additionally, U.S. e-commerce as a percentage of retail sales exploded to 27% in April 2020
To help investors focus on this developing trend, Jablonski pointed to four established and emerging technological pillars to capitalize on a rapidly increasing virtually-connected online world including:
- Home Entertainment. Companies offering and enabling exposure to streaming services, gaming and e-sports.
- Online Education. Companies creating, or servicing, technologies for online education.
- Remote Health and Well-Being. Companies providing access to virtual healthcare services and wellness experiences.
- Virtual & Digital Social Interaction. Companies that directly, or indirectly, deliver the means to interact in virtual and digital ways.
As a way to gain exposure to growing consumer trends, investors can look to the recently launched Direxion Connected Consumer ETF (CCON). CCON is the first ETF with a strategy designed to provide investors comprehensive exposure to firms at the forefront of an evolving world, where lifestyles are increasingly accessed through digital and virtual means. This change spans a wide array of areas: from how free time is spent and health is managed, to how new skills and education are obtained.
Financial advisors who are interested in learning more about investment ideas in the current environment can watch the webcast here on demand.