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With the Delta variant spreading fast and about 47% of the eligible population still not fully vaccinated, there has been a resurgence of COVID-19 cases this summer, which has erased months of progress. According to the Economic Times, the United States is averaging over 1,800 COVID-19 deaths and 170,000 new cases per day, the highest levels since early March and late January, respectively. And both figures have been on the rise over the past two weeks.
While cases in one-time hot spots like Florida and Louisiana are improving, infection rates are soaring in Kentucky, Georgia and Tennessee, with children now back in school, easing mask restrictions and low vaccination levels. The nation is dispensing about 900,000 shots of the vaccine per day, well below the peak of 3.4 million a day in mid-April.
The spike in cases has raised the prospect of another wave of shutdown and lockdown measures. As such, it has threatened business across the cities and states, and might derail the economic recovery.
While cyclical sectors tend to lose the most, defensive sectors will gain momentum. In particular, airlines, hotels, casino operators, travel, and entertainment-booking companies will be hit hard once again. Several U.S. airlines recently warned of a slowdown in ticket sales and cut the revenue forecast for the third quarter, citing lower bookings and higher cancellations due to the rising cases. Hotels are also seeing fewer bookings. People at large are avoiding crowds, thereby resulting in a decline in casino turnout and travel (read: ETFs in Focus on Airlines' Slowdown Warnings).
On the other hand, e-commerce stocks in the technology and consumer sectors are expected to be the biggest beneficiary. People will choose to stay indoors and be compelled to work and look for entertainment at home only. This will continue to boost demand for cloud computing, gaming and e-sports, as well as streaming services. Additionally, investors will continue to pile up software shares, which are apparently more insulated from the impacts of the virus.
That said, we have highlighted some ETFs from various corners of the space that are expected to win and lose from the surging pandemic.
This product offers exposure to companies across four technology pillars — cloud, cybersecurity, online project and document management, and remote communications — that allow investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment. It tracks the Solactive Remote Work Index and holds 41 stocks in its basket. The fund has accumulated $115.5 million in its asset base and charges investors 45 bps in annual fees. It has a Zacks ETF Rank #2 (Buy) (read: 5 Top-Ranked ETFs to Buy on the Dip).
This fund offers exposure to emerging, fast-growing U.S.-listed companies (including ADRs), 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 $1.3 billion in its asset base and has a Zacks ETF Rank #2.
First Trust Dow Jones Internet Index Fund (FDN - Free Report)
This fund follows the Dow Jones Internet Composite Index, giving investors exposure to the largest and most actively traded stocks of U.S. companies in the Internet industry. It holds about 42 stocks in its basket with AUM of $11 billion. The ETF charges 51 bps in fees per year and has a Zacks ETF Rank #2 (read: ETF Strategies to Profit From a Historically Weak September).
This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 72 stocks and has attracted $1 billion in its asset base. It charges 65 bps in fees per year.
This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 51 securities and charges investors 60 bps in annual fees. It has gathered $3.3 billion in its asset base and has a Zacks ETF Rank #3 (Hold).
SonicShares Airlines, Hotels, Cruise Lines ETF
This fund provides exposure to a global portfolio of companies that are focused on what many investors consider to be the “core” of business and leisure travel: the airline, hotel and cruise line industries. It tracks the Solactive Airlines, Hotels, Cruise Lines Index, holding 61 stocks in its basket with well spread-out exposure. TRYP was launched in May and has accumulated $4.8 million in its asset base so far. It charges 75 bps in annual fees.
This ETF, which was launched this month, provides diversified exposure to the global travel industry, which has historically outpaced global GDP growth for nine consecutive years between 2011 and 2019. It follows the S-Network Global Travel Index, which identifies stocks of companies that are materially engaged in the global travel industry. The fund holds 75 stocks in its basket and charges 65 bps in annual fees (read: SS&C ALPS Advisors Launches Travel ETF (JRNY - Free Report) ).
This is the first ETF that offers direct access to the technology-focused global travel and tourism industry. It follows the Prime Travel Technology Index, charging investors 75 bps in annual fees. The fund holds 34 stocks in its basket and has accumulated $275.1 million in its asset base.
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ETFs to Win & Lose as Delta Variant Cases Surge
With the Delta variant spreading fast and about 47% of the eligible population still not fully vaccinated, there has been a resurgence of COVID-19 cases this summer, which has erased months of progress. According to the Economic Times, the United States is averaging over 1,800 COVID-19 deaths and 170,000 new cases per day, the highest levels since early March and late January, respectively. And both figures have been on the rise over the past two weeks.
While cases in one-time hot spots like Florida and Louisiana are improving, infection rates are soaring in Kentucky, Georgia and Tennessee, with children now back in school, easing mask restrictions and low vaccination levels. The nation is dispensing about 900,000 shots of the vaccine per day, well below the peak of 3.4 million a day in mid-April.
The spike in cases has raised the prospect of another wave of shutdown and lockdown measures. As such, it has threatened business across the cities and states, and might derail the economic recovery.
While cyclical sectors tend to lose the most, defensive sectors will gain momentum. In particular, airlines, hotels, casino operators, travel, and entertainment-booking companies will be hit hard once again. Several U.S. airlines recently warned of a slowdown in ticket sales and cut the revenue forecast for the third quarter, citing lower bookings and higher cancellations due to the rising cases. Hotels are also seeing fewer bookings. People at large are avoiding crowds, thereby resulting in a decline in casino turnout and travel (read: ETFs in Focus on Airlines' Slowdown Warnings).
On the other hand, e-commerce stocks in the technology and consumer sectors are expected to be the biggest beneficiary. People will choose to stay indoors and be compelled to work and look for entertainment at home only. This will continue to boost demand for cloud computing, gaming and e-sports, as well as streaming services. Additionally, investors will continue to pile up software shares, which are apparently more insulated from the impacts of the virus.
That said, we have highlighted some ETFs from various corners of the space that are expected to win and lose from the surging pandemic.
ETFs to Win
Direxion Work From Home ETF (WFH - Free Report)
This product offers exposure to companies across four technology pillars — cloud, cybersecurity, online project and document management, and remote communications — that allow investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment. It tracks the Solactive Remote Work Index and holds 41 stocks in its basket. The fund has accumulated $115.5 million in its asset base and charges investors 45 bps in annual fees. It has a Zacks ETF Rank #2 (Buy) (read: 5 Top-Ranked ETFs to Buy on the Dip).
WisdomTree Cloud Computing Fund (WCLD - Free Report)
This fund offers exposure to emerging, fast-growing U.S.-listed companies (including ADRs), 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 $1.3 billion in its asset base and has a Zacks ETF Rank #2.
First Trust Dow Jones Internet Index Fund (FDN - Free Report)
This fund follows the Dow Jones Internet Composite Index, giving investors exposure to the largest and most actively traded stocks of U.S. companies in the Internet industry. It holds about 42 stocks in its basket with AUM of $11 billion. The ETF charges 51 bps in fees per year and has a Zacks ETF Rank #2 (read: ETF Strategies to Profit From a Historically Weak September).
Amplify Online Retail ETF (IBUY - Free Report)
This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 72 stocks and has attracted $1 billion in its asset base. It charges 65 bps in fees per year.
ETFs to Lose
U.S. Global Jets ETF (JETS - Free Report)
This fund provides exposure to the global airline industry, including airline operators and manufacturers from all over the world, by tracking the U.S. Global Jets Index. In total, the product holds 51 securities and charges investors 60 bps in annual fees. It has gathered $3.3 billion in its asset base and has a Zacks ETF Rank #3 (Hold).
SonicShares Airlines, Hotels, Cruise Lines ETF
This fund provides exposure to a global portfolio of companies that are focused on what many investors consider to be the “core” of business and leisure travel: the airline, hotel and cruise line industries. It tracks the Solactive Airlines, Hotels, Cruise Lines Index, holding 61 stocks in its basket with well spread-out exposure. TRYP was launched in May and has accumulated $4.8 million in its asset base so far. It charges 75 bps in annual fees.
ALPS Global Travel Beneficiaries ETF (JRNY - Free Report)
This ETF, which was launched this month, provides diversified exposure to the global travel industry, which has historically outpaced global GDP growth for nine consecutive years between 2011 and 2019. It follows the S-Network Global Travel Index, which identifies stocks of companies that are materially engaged in the global travel industry. The fund holds 75 stocks in its basket and charges 65 bps in annual fees (read: SS&C ALPS Advisors Launches Travel ETF (JRNY - Free Report) ).
ETFMG Travel Tech ETF (AWAY - Free Report)
This is the first ETF that offers direct access to the technology-focused global travel and tourism industry. It follows the Prime Travel Technology Index, charging investors 75 bps in annual fees. The fund holds 34 stocks in its basket and has accumulated $275.1 million in its asset base.