Consumers are a finicky bunch, and gauging their behavior has been complicated by the global outbreak of Covid-19, which has upended people’s buying habits and daily routines.

Apple co-founder Steve Jobs once noted the conundrum of trying to predict consumers by saying, “A lot of times, people don’t know what they want until you show it to them.” Nevertheless, ETFs closely tied to consumer spending reveal massive shifts regarding what people are doing and buying these days.

Let’s examine four key consumer trends and link ETF opportunities to them.

Consumers’ increasing usage of digital payment instead of physical cash.
The dictum that “cash is king” is not necessarily true with the way consumers are spending. Mobile wallets from market leaders like, Apple Pay and PayPal are replacing physical wallets. Moreover, this development, along with e-commerce and the rise of independent digital payment systems, is accelerating. 

The ETFMG Prime Mobile Payments ETF (IPAY), which holds a basket of 42 stocks, aims to capture the digital payment trend. IPAY has gained almost 69% during the past three years (through June 30) compared with a nearly 34% gain for the Schwab U.S. Broad Market ETF (SCHB). During the past year, IPAY has lagged the broader stock market, but it might be a buying opportunity if you believe in the digital payments trend. The fund's expense ratio is 0.75%.

Acceleration of cloud-based services and software.
Corporate earnings for S&P 500 stocks are projected to have negative sales growth for the rest of this year. In contrast, companies in the software and cloud storage arena are expected to grow. Like digital payments, the trend of a digitally connected world was already bright, but it’s now accelerating because of Covid-19.

Consumer behavior has quickly adopted videoconferencing, remote data storage, e-learning and telehealth. The First Trust Cloud Computing ETF (SKYY) covers some of these technological trends by including companies such as Zoom Video Communications, DocuSign and Dropbox among others in its 64 holdings. SKYY has gained just a tick less than 94% over the past three years, trouncing the S&P 500 by a factor of three. It charges a fee of 0.60%.

More people are skipping the daily commute and working from home.
Covid-19 forced many people to work from home. And some of these drastic changes for Corporate America are already becoming permanent. For example, Twitter announced in May that its 4,900 employees would be allowed to permanently work from home. 

While it’s unclear whether companies will embrace Twitter’s radical work-from-home policies, it’s plausible that more companies will adopt a work environment that geographically spreads employees rather than concentrating them in fixed locations.

The newly launched Direxion Work From Home ETF (WFH) aims to capture this trend with a four-pronged approach by owning companies involved with cloud technologies, cybersecurity, online project and document management, and remote communications. WFH's portfolio contains 40 stocks and charges annual expenses of 0.45%.

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