“To be honest, when the Covid-19 pandemic began to increase in scope, we very quickly worked with our index partner, Solactive, to put a proper index together on this,” he said.
The timing with this fund is impeccable, but what if a Covid vaccine is developed and the work world’s so-called new normal reverts to the old normal?
“There are a few scenarios of what a post-Covid world could look like,” Mazza explained. “My expectation is there will be a new normal with employees and firms working both remotely and in traditional office settings.”
But he posits that even in a scenario where a miracle vaccine is quickly developed, companies have learned from this experience that in certain roles productivity has increased when people work from home. In addition, they realize their commercial real estate footprint could be reduced if more people worked remotely.
“While I don’t expect the hyper revenue growth we’ve seen from some of these companies to repeat in perpetuity, there has been a greater secular force of moving toward greater adoption of a better work/life balance that has been going on for years,” Mazza said. “And this has been accelerated by the pandemic.”
Direxion points to a PwC survey showing that 54% of companies said they plan to make remote work a permanent option for roles that allow it. Among financial services firms, that number was 61%. Time will tell if the work-from-home phenomenon has legs.
Regarding the WFH fund’s metrics, Direxion spotlights data from Bloomberg Finance LP showing that WFH’s underlying index collectively sported a higher price-to-earnings ratio than either the Nasdaq 100 or S&P 500 indexes as of May 31 (it was only slightly higher than the Nasdaq), but its estimated earnings-per-share growth was significantly greater than both of those indexes.
The fund’s expense ratio is 0.45%. Direxion proposes that this product can be used as a satellite holding within a broader equity portfolio.