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JNJ Vaccine Pause Gives Stay-at-Home ETFs a Shot in the Arm

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U.S. regulators dealt a blow to the global vaccination campaign that has started to tackle the pandemic. The Centers for Disease Control and Prevention and the Food and Drug Administration recommended an immediate pause on the use of Johnson & Johnson's (JNJ - Free Report) COVID- 19 vaccine over reports of a "rare and severe type of blood clot" in six out of millions vaccinated.

More than 6.8 million doses of the JNJ vaccine were administered in the United States as of Apr 12 and six women between the ages of 18 and 48 saw unusual clots with symptoms appearing six to 13 days after vaccination (read: Top COVID-19 Vaccine Stories of March Put Biotech ETFs in Focus).

The studies have shown that the Johnson & Johnson vaccine is 66% effective in preventing cases of moderate-to-severe illness and 85% effective against severe cases of COVID-19. It completely prevented hospitalizations and death four weeks after inoculation, according to studies. The company was on course to provide 100 million doses by the end of May.

The pause in JNJ vaccine could threaten economic recovery, prompting investors to rotate out of stocks poised to profit from a post-pandemic economic recovery and into companies that could benefit from a slower vaccine rollout.

ETF Impact

The vaccine setback has sparked a rally in the stay-at-home ETFs, which have been battered this year by the expectation of an economic rebound. Below we have highlighted five funds that have gained most following the news:

ARK Next Generation Internet ETF (ARKW - Free Report) – Up 3.8%

This is an actively managed fund seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. The fund holds 53 securities in its basket and charges 79 bps in annual fees. The product has gathered $7 billion in its asset base and trades in volume of 2.2 million shares.

WisdomTree Cloud Computing Fund (WCLD - Free Report) – Up 2.7%

This ETF offers exposure to emerging and fast-growing U.S.-listed companies (including ADRs) that are primarily focused on cloud software and services, and follows the BVP Nasdaq Emerging Cloud Index. It holds 58 stocks in its basket and charges investors 45 bps in fees per year. The product has amassed $1.2 billion in its asset base and trades in an average daily volume of 583,000 shares. It has a Zacks ETF Rank #3 (Hold) (read: A Comprehensive Guide to Cloud Computing ETFs).

Global X Cybersecurity ETF (BUG - Free Report) – Up 2.2%

This ETF offers exposure to 27 companies that stand to benefit from the increased adoption of cybersecurity technology and follows the Indxx Cybersecurity Index. It has accumulated $845.6 million in its asset base and trades in an average daily volume of 256,000 shares. The fund charges 50 bps in annual fees (read: A Quick Guide to Cyber Security ETFs).

iShares Virtual Work and Life Multisector ETF (IWFH - Free Report) – Up 2.1%

This fund provides access to companies at the forefront of virtual and remote working and living innovation. It offers exposure to global stocks along the full value chain of virtual and remote entertainment, wellness and learning industries by tracking the NYSE FactSet Global Virtual Work and Life Index. Holding 79 stocks in its basket, IWFH accumulated $8.8 million in its asset base since its inception in September 2020. It charges 47 bps in annual fees.

What Lies Ahead?

The JNJ setback is expected to create a gap in immunization goals and has come at a time when new cases in the United States are rising again. According to Johns Hopkins University, the seven-day rolling average for daily new cases in the United States rose over the past two weeks from 63,236 on Mar 28 to 70,040 on Apr 12.

However, the Biden administration stated that the pause would not derail the vaccination goals and there are enough coronavirus vaccine shots for “every single solitary American.” The vast majority of doses making up the U.S. COVID-19 vaccine supply currently come from Moderna (MRNA - Free Report) and Pfizer (PFE - Free Report) . About 25 million doses of vaccines made by these companies have been distributed every week and 28 million doses are being shipped this week (read: ETFs to Shine on Pfizer's Impressive COVID-19 Vaccine Update).

Additionally, Pfizer has ramped up its vaccine production and aims to deliver 10% more doses than it had previously promised. With this, Biden continues his goal of 200 million doses in his first 100 days in office. According to the Centers for Disease Control and Prevention latest data, the United States has administered more than 187 million doses of COVID-19 vaccines as of Apr 11 with 119.2 million people receiving at least one dose and 72.6 million people being fully vaccinated.

The rise in the number of new cases coupled with slowdown in economic recovery will boost the stay-at-home ETFs. But if vaccinations go as planned in the absence of JNJ, these funds might again see rough trading.

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