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Will Coronavirus Vaccine Optimism Drive These ETFs?

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The coronavirus outbreak has crossed the grim mark of 4 million cases in the United States. The world’s largest economy has seen a staggering 1 million new cases in just 15 days in comparison to 28 days taken to gain an additional million and surpass the 3 million mark on Jul 8, per a CNN report. Also, the count of people dying from the disease looks bad at around 143,820. Looking at the rising number of cases, President Trump has called off the Jacksonville, FL, component of the Republican National Convention.

Notably, the outbreak has caused an unprecedented collapse in economic activities as governments had to shut down commerce and implement social-distancing measures in an effort to contain the spread of the virus. Resultantly, a lot of sectors have been seeing slowdown due to the coronavirus outbreak. Also, the halting or rolling back of the reopening process may derail economic recovery achieved so far.

Vaccine Developers Showing Progress

In such a scenario, coronavirus vaccine progress has brought back optimism for some performance of some ETFs. Data from the ongoing Phase I/II trial of the coronavirus vaccine candidate, also known as AZD1222, which AstraZeneca (AZN) is developing in collaboration with Oxford University, was recently published in the medical journal The Lancet. The newly-released data showed “strong” antibody and immune T-cell responses in participants which lasted at least for a couple of months (per a CNBC article).

Positive update on coronavirus vaccines made by Pfizer (PFE) in collaboration with German biotech firm BioNTech was recently announced. Two out of four of the companies’ coronavirus vaccine candidates, BNT162b1 and BNT162b2, have been granted the ‘fast track’ designation by the FDA. The fast-track status will speed up the review process of Pfizer’s coronavirus vaccines. In fact, the Trump administration has entered into a deal with the company to manufacture 100 million doses of a COVID-19 vaccine in the United States, for distribution after providing emergency authorization.

The first company to start human clinical trials of its coronavirus vaccine candidate in the United States — Moderna (MRNA) — has also shown progress. According to data published in the New England Journal of Medicine, Moderna’s potential coronavirus vaccine candidate resulted in a “robust” immune response in all participants in its early stage human trial, per a CNBC article.

ETFs to Gain on Vaccine Optimism

Let’s take a look at some ETFs that can gain from the introduction of a coronavirus vaccine:

U.S. Global Jets ETF (JETS - Free Report)

The coronavirus outbreak has hammered the U.S. economy, with the airline sector being one of the worst-hit spaces. The virus’ spread resulted in declining air travel with restrictions imposed by the government. Consequently, airlines’ top lines suffered a material impact as passenger revenues form the largest component of their total revenue base. In fact, with the pandemic showing almost no signs of waning, air travel demand is likely to remain stressed, at least in the near term. Looking at the stressed balance sheets of the carriers, it will be safe to say that the sector will surely get a boost from vaccine development.

The fund provides investors access to the global airline industry, including airline operators and manufacturers from all over the world. Holding 40 securities, the fund has AUM of $1.21 billion, with an expense ratio of 0.60% (read: 5 Sector ETFs That Beat the Market in June).

The Energy Select Sector SPDR Fund (XLE - Free Report) )

The coronavirus pandemic has dealt a heavy blow to the energy sector. Dented global energy demand and oversupply have also been hurting the sector for long. The outbreak has forced operators to cut costs significantly by suspending some of their major activities as well as trimming workforce. Per a recent Rystad Energy analysis of the latest US Bureau of Labor Statistics data, more than 100,000 oil and gas jobs are already lost with majority occurring in the support activities market. Precisely, the report further states that the support activities segment has seen a staggering retrenchment of 20% employees compared with February’s pre-pandemic levels.

The fund seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Energy Select Sector Index. Holding 26 securities, the fund has AUM of $10.64 billion, with an expense ratio of 0.13% (read: Energy ETFs to Surge on Chevron-Noble Energy Deal).

Vanguard Consumer Discretionary ETF (VCR - Free Report)

The coronavirus outbreak has largely impacted the consumer discretionary sector, which attracts a major portion of consumer spending. Major retailers, restaurants and hotels in the United States had to shut down operations domestically and abroad. Also, the pandemic has resulted in some changes in the lifestyle and preferences of Americans. Most of the surveys have found that people are more interested in opting for online shopping rather than visiting a brick-and-mortar store for their purchases of essential food items and supplies. Even as the U.S. economy reopens in phases and social-distancing restrictions are being eased, people will try to minimize human-to-human contact.

The fund seeks to track the performance of the MSCI US Investable Market Consumer Discretionary 25/50 Index that measures the investment return of consumer discretionary stocks. Holding 293 securities, the fund has AUM of $3.50 billion, with an expense ratio of 0.10% (read: How to Ride on a Soaring Amazon With ETFs).

First Trust NASDAQ Global Auto ETF (CARZ - Free Report)

The coronavirus pandemic has affected production and sales of vehicles as carmakers had to shut down facilities in late March across the United States. However, with many states starting to ease restrictions, automakers have restarted operations to some extent.

The fund seeks investment results that correspond generally to the price and yield, before the fees and expenses, of the NASDAQ OMX Global Auto Index. Holding 34 securities, the fund has AUM of $19.2 million, with an expense ratio of 0.70% (read: ETFs to Surge as Tesla Turns to Profit, Secures S&P 500 Entry).

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