An ETF Strategy to Capture the Shift Toward Remote Work | ETF Trends

In an ever-changing market environment, investors may turn to a targeted exchange traded fund strategy for getting precise exposure to the emerging Work-From-Home economy.

In the recent webcast, The 4 Pillars of Investing In the Remote-Work Future, Now., Sylvia Jablonski, Managing Director, Institutional ETF Strategy, Direxion, highlighted more convenient technology that allows for greater remote productivity and trends toward more flexible and remote work locations. Meanwhile, society has embraced the idea that a work-life balance does not require certain job functions to be executed in a traditional office setting, and companies have become more comfortable in allowing remote work.

“The need for lower density office spaces due to the COVID-19 pandemic will only serve to accelerate these trends,” Jablonski said.

“This recent experience may see some companies find certain job functions are more productive conducted in remote locations, creating a new normal when it comes to flexible work, which will see companies offering these technologies to benefit thanks increased revenue potential,” she added.

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. 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 hone in on this developing trend, Direxion has 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 explained that Companies are selected for inclusion in the index by ARTIS, a proprietary natural language processing algorithm, which uses keywords to evaluate large volumes of publicly available information, such as annual reports, business descriptions, and financial news. The ARTIS algorithm then ranks these companies based on their relevance to the keywords and assigns a score to each company. The Index consists of the top 10 rated companies in each identified category.

For example, the Cloud Technologies pillar includes companies like Microsoft, Amazon.com, and IBM. The Online Project and Document Management Pillar includes Upland Software, Box, and Alatassian Corporation. The Cyber Security Pillar includes Fortinet, Okta, and Palo Alto Networks. Lastly, the Remote Communications Pillar includes Zoom Video Communications, 8×8, and LogMeln.

Financial advisors who are interested in learning more about investing in this new business environment can watch the webcast here on demand.

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