The communications sector is feeding off the latest innovation in facilitating interaction among humans despite the challenges of Covid-19. This is fueling communications-focused exchange-traded funds (ETFs) as of late.
“Exchange-traded funds with communications services stocks outperformed on Thursday as investors reached for the certainty of companies that will benefit from an extended period of working from home,” a MarketWatch article noted. “The Communications Services Select Sector SPDR Fund XLC, +0.33% was up 0.9% at midday, the best performer among 11 exchange-traded funds that track the sectors of the S&P 500 SPX, +0.27%.”
“The Vanguard Communications ETF VOX, +0.20% was up 0.8%, and the Fidelity MSCI Communications Services Index ETF IVV, +0.32% gained 0.7%,” the article added. “On Thursday, the S&P 500 was down fractionally and the Nasdaq Composite COMP, +0.10% was up 0.3%. The three funds have very similar compositions: hefty holdings in Facebook Inc. FB, +0.16%, Alphabet Inc. Class C GOOG, -0.01% and Class A GOOGL, +0.13%, and big chunks of shares of service providers like Verizon Inc. VZ, +0.09% and Comcast Corp CMCSA, +0.79%, all of which were higher on Thursday. The SPDR fund, the biggest of the three, has returned the most in the year to date: 21%. That trails the Nasdaq’s 24% gain during that time.”
For traders looking for a fund with some 3x juice, then the Direxion Daily Communication Services Index Bull 3X Shares (TAWK) will do the trick.
TAWK seeks daily investment results equal to 300 percent of the daily performance of the Communication Services Select Sector Index. The index includes domestic companies from the communication services sector, which includes the following industries: diversified telecommunications services, wireless communication services, media, entertainment, and etc.
With the transparency and liquidity of an ETF wrapper that incorporates multiple hedge fund strategies, funds like TAWK opens up the arena to all types of investors irrespective of net worth. In addition, the communications sector can be used as a defensive maneuver amid the coronavirus outbreak, making TAWK a good option that’s not relegated to just leverage-hungry traders.
As more communication takes place using technology, one other ETF to look at is the Direxion Shares ETF Trust – Direxion Work From Home ETF (WFH). The fund invests in stocks of companies operating across work from home includes remote communications, cybersecurity, project and document management, and cloud technologies sectors. It invests in growth and value stocks of companies across diversified market capitalization.
It seeks to track the performance of the Solactive Remote Work Index, by using full replication technique. Additionally, WFH:
- Uses advanced techniques to identify the 40 stocks accelerating greater adaption of remote work
- Offers exposure to four pillars, across established and emerging technologies, that power the ability to work from home efficiently and effectively
- May be considered a satellite holding to complement other broader positions within a portfolio