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Exclusive: Online Learning Got You Down? At Least You Can Bet On It

Stock MarketsJul 20, 2020 11:22AM ET
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By Christiana Sciaudone

Investing.com -- Got kids in quarantine? With school openings uncertain for the fall and the threat of a fresh round of stay-at-home orders in big U.S. cities, investors may be looking for a new way to get in on the burgeoning field of online learning.

To do so in one fell swoop, look no further than the first education-focused thematic exchange-traded fund, Global X Education ETF (NASDAQ:EDUT), which debuted on July 14. As far as Investing.com can tell, it’s the only pure education play on the market today. Part of the reason for that, according to the fund's creator, is that schooling has largely been in the hands of the government, so there have been fewer opportunities for investors looking for stocks of publicly traded education companies.

“Education is more publicly funded, but we do think that dynamic is changing very quickly as people are looking to plug the gap, not just in the U.S., but around the world,” said Jay Jacobs, head of research at Global X.

Education is comparable to healthcare, but in the latter, about 50% of expenditures come from the private sector, versus about 25% for the former, Jacobs said. Among the fund’s top holdings are China’s TAL Education Group (NYSE:TAL), Zoom Video Communications Inc (NASDAQ:ZM), Pearson PLC ADR (NYSE:PSO) and Bright Horizons (NYSE:BFAM). 

“The allocation is really what’s available on the market,” Jacobs said in a phone interview last week. Companies are likely to evolve to do “full lifecycle learning,” addressing educational needs from nursery through professional development. 

EDUT, a passive ETF, wasn’t created as a Covid-19 play, but it could end up being a good bet with the prevalence of distance learning and school systems in the U.S. showing a reluctance to open. 

“Covid is an accelerant to the theme,” Jacobs said, noting that such thematic ETFs that aim to profit off the pandemic are all the rage right now. 

EDUT’s holdings include categories of educational content, publishing, digital learning platforms, early childhood education, secondary/higher education and enterprise video and chat communications. Jacobs said the ETF took about six months to research and put together.

Exclusive: Online Learning Got You Down? At Least You Can Bet On It
 

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Comments (2)
Justin McGill
Justin McGill Jul 20, 2020 5:35PM ET
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Also HMHC - nearly $1.4B in revenue.
Odum Francis
Odum Francis Jul 20, 2020 12:04PM ET
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This is still underrated. You didn't mention TWOU - another top online learning company.
John Chilson
John Chilson Jul 20, 2020 12:04PM ET
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This article is about a particular fund and it's top holdings, not any individual company. If you're right however, then maybe another fund with that holding is more appropriate.
 
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