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This New ETF Offers an All-in-One Investment in the Work-From-Home Trend

By Matthew Frankel, CFP® – Jun 25, 2020 at 9:35AM

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A lot of us won't be heading back into the office full-time after the pandemic wanes, so you may want to invest in companies well-positioned to support remote work.

If you think -- as many experts do -- that a large share of the people who shifted to working from home when the COVID-19 pandemic hit will continue to do so even after social distancing rules are relaxed, you might want to take a look at Direxion's newest ETF.

The ETF provider just launched the Direxion Work From Home ETF (NYSEMKT: WFH) is designed to allow investors to put their money to work in a basket of stocks that are well-positioned to capitalize on the trend toward remote work.

Woman using laptop computer.

Image source: Getty Images.

What stocks does the Direxion Work From Home ETF invest in?

The new ETF tracks the Solactive Remote Work Index, which holds stakes in 40 different companies. It's rebalanced to equal-weight (such that each company accounts for 2.5% of the fund's value) semi-annually, so it's important to note that the ETF's holdings can diverge significantly from equal weighing in the interim.

Specifically, the index owns the top 10 companies in each of four sectors that are tightly connected to remote work -- remote communications, cybersecurity, online project and document management, and cloud computing. Examples of holdings as of the ETF's launch include Twilio (TWLO 1.61%), Crowdstrike (CRWD 2.03%), Okta (OKTA 2.33%), Zoom Video Communications (ZM 1.27%), and Box (BOX 2.02%).

What does the ETF cost?

When investing in any ETF, it's important to be aware of the fees it charges. The key figure for investors on that score is the expense ratio, which measures the fund's fees as a percentage of invested assets.

The Direxion Work From Home ETF's expense ratio is 0.45%, which means that for every $10,000 a person invests in the fund, they will be charged $45 in investment fees each year. That's certainly more than most broad-index ETFs (like an S&P 500 index fund) are likely to charge, but it isn't high when compared to many other ETFs that target specific trends as this one does.

In a nutshell, if you want to invest in the remote-work trend, but don't want to do so by picking just a handful of specific stocks, the Direxion Work From Home ETF offers a viable and reasonably priced way to spread your money out among dozens of companies poised to profit from it.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Box, CrowdStrike Holdings, Inc., Okta, Twilio, and Zoom Video Communications and recommends the following options: short August 2020 $130 calls on Zoom Video Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Box, Inc. Stock Quote
Box, Inc.
BOX
$24.74 (2.02%) $0.49
Twilio Inc. Stock Quote
Twilio Inc.
TWLO
$70.11 (1.61%) $1.11
Okta Stock Quote
Okta
OKTA
$54.07 (2.33%) $1.23
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$74.26 (1.27%) $0.93
CrowdStrike Holdings, Inc. Stock Quote
CrowdStrike Holdings, Inc.
CRWD
$162.58 (2.03%) $3.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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