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Investing in work from home ETFs

Direxion Managing Director of Capital Markets Sylvia Jablonski joins Yahoo Finance’s On The Move panel to discuss how investors can tap into the rising remote-work trends.

Video Transcript

- Welcome back to Yahoo Finance On The Move. We are watching markets for you right now, but want to invite in to the program Sylvia Jablonski, Direxion Managing Director of capital markets. Joining us from New York, and although you see tumbleweeds blowing behind her in that empty office, she is in the office, and will be joined by other office workers hopefully, in September, as we watch markets and we watch a recovery in the economy. You still point out keep an eye on work from home despite being in the office. Why work from home stocks and which ones do you like?

SYLVIA JABLONSKI: Sure, so work from home actually doesn't literally mean that, you know, the ETF will keep working or the theme will keep working because we're working from home. It's just-- it's a trend that we were thinking about well before COVID and then, you know, COVID came, and it became more interesting to get this product out there, and to think about this theme.

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But what work from home means is basically investing in four pillars, so, you know, online communications, what we're doing right now. Zoom, Google Meets, the different-- Webex-- the different platforms that do that. It's sharing documents online. It's communicating with colleagues, cybersecurity, and the cloud. So you know you have names like Amazon for the cloud, you have names like Twilio, and SECO, Elastic. You know, some of these names are contributing to the 5G revolution that's coming. Other names are protecting our data.

And I just think that as a society, we're going to have some version of hybrid flexible work. Whether it's permanently working from home, spending some of the time at home, I do think that that's where the trend is going. And these names have just ripped. I mean, you know, if you just look at Zoom in and CrowdStrike, for example, revenues are up close to 100% on both of those names year to date. And I think, you know, the more that people are schooled from home and working from home and things like that, I just think it's still a good sector to look at.

- So Sylvia, it's Julie here. It's good to see you. So as you look at sort of the allocation or look at how you're thinking about how to diversify, of course, we have the FANG stocks that have also been ripping, right, and also been really supporting the market this year. Is it time to shift into some of those other areas like work from home or other areas of the market that maybe have not seen that dramatic upside? Is this the moment to do something like that?

SYLVIA JABLONSKI: Yeah, it's a great question. So, you know, I have-- I still like the FANG stocks and I think the story is still there. And it's almost the same story for me. You know, look at Amazon earning-- their earnings absolutely crushed it for these names, and you sort of see why people need to keep buying, whether it's hardware or software, laptops, you know, they're subscribing to services, they're buying everything online-- all this theme is sort of the same there. I just think that what's unique about looking at you know work from home types of ETFs and, you know, smaller sectors is that you get access to these tech names that are sort of less known, and the valuations are a little bit lower than the big tech names, the valuations are lower than NASDAQ 100 as a whole, for example.

So they're a little bit cheaper to buy. They might be the next tech, the next, you know, five, six names that rule the market, I think, could be in the work from home index. So I think it's a great way to complement your tech position. And look, if you're trying to sell out at these highs on Apple and Facebook and Alphabet and whatnot, you could take some of that money and allocate it to some of these four pillars or work from home index type of product, and get some-- hopefully, some growth in ROI there.

BRIAN CHEUNG: Sylvia, it's Brian Cheung. I want to rewind to those names that you just threw out there-- Zoom, CrowdStrike, for example, has the boat already left port already? Because when you look at the run up in these stocks just from the March 23 lows, for example, I'm looking at CrowdStrike, that's up 120% since that point in time, Zoom, 65% since that time-- so is it too expensive to be buying it now?

SYLVIA JABLONSKI: Yeah, I think, you know, that's a great question, but what I think supports the buy-- and for that reason, I like the ETF, and I'm not sort of, like, stock picking on those names, because what you get with an ETF is, like, exposure to 40 names like this in this space in the pillars. So if it's not-- yeah, I think that Zoom will hold up and sustain, because I think that people will keep, again, working from home. I just think the trend is going there.

I've read a whole bunch of PwC surveys, Salesforce surveys, you know, all this information is coming out that like 70% of the working population across various industries believes that they'll have at least a high percentage-- some are saying 50% or more-- at home. And, you know, you need to be accountable and communicate with your colleagues, and manage your teams. And I think you know, whether it's Webex, Zoom, whatever application you're using-- even if it's like Facebook, whatever-- whatever application you're using, you are using some sort of videos. I think that they have room to grow.

And the other thing is with CrowdStrike, you know, they projected 60% revenue growth this year, they're projecting another 30% to 40% for next year. So that trade is not going away. And if you think about the things that are happening like Twilio, for example, is a name that falls under the work from home index, and, you know, we're using Twilio to do not only two factor authentication, which we all do, but also, contact tracing, right? You don't think about that, but the whole country is using Twilio in order to do contact tracing, and that, if anything, will just continue to grow as people figure out how to do it a little bit better.

So yes, they're high, they've run up a lot, but I just don't see this going away from the next year or two, particularly with what we see going on with COVID. I mean, it seems to be getting worse in most places and further widespread rather--

- We're keeping an eye on it.

SYLVIA JABLONSKI: Yeah.

- I mean, it is an issue. Sylvia Jablonski, Direxion Managing Director of Capital Markets. It's always good to see you. We look forward to seeing you back in studio when we can do that in person.