Nationwide COVID-19 lockdowns in Europe once again stirred fears of further spread of infections. New restrictions beyond the continent weighed on the broader U.S. market as travel restrictions have been easing slowly.This raises the chances of another wave of COVID-19 in other parts of the world.
The United States may be more vulnerable in winter than many European countries, as per Jim Reid, chief economist at Deutsche Bank (DE:DBKGn), as quoted on Yahoo Finance. Going by recent history, Reid said that the United States has a higher bar for economic restrictions related to COVID-19. Then again, it has a lower rate of vaccination rate than its European peers.
Stay-at-home ETFs and technology ETFs should stay strong if the fears sustain. As we all know, Internet stocks are pandemic winners as these have less to do with human contact. The coronavirus scare favored the online retailing industry as any kind of lockdown and self-imposed quarantine boost the demand for online shopping and other kinds of Internet activities.
This puts the spotlight on ETFMG Video Game Tech ETF GAMR, Direxion Work From Home ETF WFH, Global X Cloud Computing ETF CLOU, VanEck Semiconductor ETF SMH and Amplify Online Retail ETF IBUY and iShares Biotechnology ETF IBB.
The coronavirus-led restrictions last year resulted in an e-commerce boom and stay-at-home activities. The new restrictions are expected to lead to the same trend. As such, people will again choose to stay indoors, which in turn would boost demand for cloud computing, gaming, e-sports, streaming services as well as online shopping. Additionally, investors will continue to pile up software shares, which are apparently more insulated from the impacts of the virus.
ETFs in Focus
ETFMG Video Game Tech ETF
The video game industry has been a winner in the ongoing health crisis. For nine months, the total consumer spending on gaming rose 12% year over year to $42.28 billion. It is impressive to observe that the video gaming industry is witnessing strong sales growth despite tough year-over-year comparisons, highlighting the strength in the space (read: Bet on These Video Gaming ETFs to Gain From Surging Sales).
The underlying EEFund Video Game Tech Index tracks companies actively involved in the electronic gaming industry, including the entertainment, education and simulation segments. ETFMG Video Game Tech ETF charges 75 bps in fees.
Global X Cloud Computing ETF
Cloud computing and storage are expected to stay in vogue in 2021. The space has received quite a push amid the coronavirus outbreak with a vast population working from home across the globe. Considering the renewed COVID-19 fear, demand for cloud computing is set to stay robust in the coming days.
The underlying Indxx Global Cloud Computing Index provides exposure to exchange-listed companies in developed and emerging markets that are positioned to benefit from the increased adoption of the cloud computing technology. The Zacks Rank #2 Global X Cloud Computing ETF charges 68 bps in fees.
Direxion Work From Home ETF
The underlying Solactive Remote Work Index comprises U.S.-listed securities and ADRs of companies that provide products and services in at least one of the following business segments that facilitate the ability of people to work from home: remote communications, cyber security, online project and document management, and cloud computing technologies. The Zacks ETF Rank #2 (Buy) Direxion Work From Home ETF charges 45 bps in fees.
VanEck Semiconductor ETF
The semiconductor space has been on a tear as the pandemic has bolstered the demand for chips, leading to the worst global shortage in many years. Corporate earnings from the likes of Nvidia (NASDAQ:NVDA), Qualcomm (NASDAQ:QCOM) and Advanced Micro Devices (NASDAQ:AMD) have been upbeat. The recent upsurge in the electric vehicle industry and increased awareness for clean energy have also made the semiconductor industry an investors’ darling (read: 4 ETF Areas Near One-Year High With More Room for Growth).
The underlying MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment. The Zacks Rank #1 (Strong Buy) VanEck Semiconductor ETF charges 35 bps in fees.
Amplify Online Retail ETF
According to the National Retail Federation (“NRF”), holiday season sales in 2021 are projected to surpass all existing records during November and December and rise 8.5-10.5% year over year to between $843.4 billion and $859 billion. Holiday sales increased 8.2% in 2020 to hit a record of $770 billion. The NRF projects online and other non-store sales increase of 11% to 15% to between $218.3 billion and $226 billion compared with $196.7 billion in 2020.
The underlying EQM Online Retail Index utilizes a rules-based methodology to select a globally diverse group of companies with 70% or more of revenues from online and virtual sales. Amplify Online Retail ETF charges 65 bps in fees.
iShares Biotechnology ETF
With the spread of COVID-19 resuming all over again, all focus will shift to the booster shots of vaccines and antiviral therapies. Hence, iShares Biotechnology ETF, which has considerable exposure to Moderna (NASDAQ:MRNA), should prevail.
The underlying ICE (NYSE:ICE) Biotechnology Index contains securities of NASDAQ-listed companies that are classified as either biotechnology or pharmaceuticals. iShares Biotechnology ETF charges 45 bps in fees.
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iShares Biotechnology ETF (IBB): ETF Research Reports
VanEck Semiconductor ETF (SMH): ETF Research Reports
Amplify Online Retail ETF (IBUY): ETF Research Reports
Wedbush ETFMG Video Game Tech ETF (GAMR): ETF Research Reports
Global X Cloud Computing ETF (CLOU): ETF Research Reports
Direxion Work From Home ETF (WFH): ETF Research Reports
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