The first half of 2020 was marked withthe outbreak of SARS (severe acute respiratory syndrome)-like coronavirus in late January. Due to the rapid spread of the virus, Wall Street snapped its longest bull run ever in March and went on to record its worst quarter since fourth-quarter 2008 (read: Top ETF Stories of First Quarter).
The resultant lockdowns which fell mainly in the second quarter weighed heavily on global economies. Many economies went into recession. In fact, the second quarter witnessed the historic event of negative oil price in April due to higher supplies, poor demand and a shortage of storage. Though economies started reporting upbeat economic data points with the lifting of lockdowns, fears of a second of wave of the contagion became rife at the end of Q2.
Meanwhile, global central banks and governments launched a trillion-dollar stimulus in the first half. As a result, global stocks rallied in Q2. Since the market hit lows on Mar 23, the S&P 500 gained roughly 40% till early June, marking the best 50-day rally in history.
Technology: The Best Sector of 1H
Overall, the tech and healthcare sectors have emerged winners this year due to social distancing norms, and the push for treatment and vaccine development. Among the duo, tech delivered an all-star performance in the first half.
Stocks that deal with Internet-related activities had all the more reason to surge in 1H as it has less to do with human contact. The coronavirus scare favored the online retailing and digital payments industry as lockdowns boosted demand for online shopping, video gaming, esports and most importantly work and learn from home.
The rapid emergence of cutting-edge technology, including cloud computing, big data, IoT, VR, AI, has been driving the sector. The growing adoption of 5G technology — the next wireless revolution — is opening up further opportunities.
Cloud computing’s popularity is growing amid the pandemic and altering the way people are managing data, communication and business. It has also found applications in social networking, messaging apps and streaming services.
Now, the rampant usage of Internet has raised the risk of cyber threats. In case of work from home, proprietary business data is being accessed from personal computers and laptops that may not have the same level of security as in-office setups.
Hackers have started taking advantage of the coronavirus panic. There have been “phishing efforts by sending out emails designed to look as if they’re official notices from the World Health Organization.” The trend has boosted cyber security stocks and ETFs this year (read: Cyber Security ETFs to Thrive in the Virus-Hit Economy).
Against this backdrop, below we highlight a few technology and Internet-related ETFs that topped in the first half of 2020 and are likely to stay strong in 2H if signs of coronavirus spread do not subside materially.
Best-Performing Tech Related ETFs of 1H
WisdomTree Cloud Computing ETF WCLD – Up 52.56%
The underlying BVP Nasdaq Emerging Cloud Index is an equally weighted Index, designed to measure the performance of emerging public companies focused on delivering cloud-based software to customers. The fund charges 45 bps in fees (read: 5 Red Hot Stocks in the Top ETF of 1H).
ProShares Long OnlineShort Stores ETF CLIX – Up 48.95%
The ProShares Long Online/Short Stores Index consists of long positions in the online retailers included on the ProShares Online Retail Index and short positions in the bricks and mortar retailers included on the Solactive-ProShares Bricks Index and Mortar Retail Store Index. The fund charges 65 bps in fees.
ARK Next Generation Internet ETF ARKW – Up 48.12%
This ETF is active and does not track a benchmark. The stocks of the fund are expected to benefit from shifting the bases of technology infrastructure to the cloud, enabling mobile, new and local services, such as companies that rely on or benefit from the increased use of shared technology, infrastructure and services, Internet-based products and services, new payment methods, big data, the Internet of things, and social distribution and media. It charges 76 bps in fees.
O’Shares Global Internet Giants ETF OGIG – Up 44.68%
The fund is a rules-based ETF designed to provide investors with the means to invest in some of the largest global companies that derive most of their revenues from the Internet and e-commerce sectors that exhibit quality and growth potential. The fund charges 48 bps in fees.
Franklin Disruptive Commerce ETF BUYZ – Up 44.26%
The fund provides access to companies that are related to new online markets, streamlined procurement systems, and game-changing ways to deliver goods and services. The fund charges 50 bps in fees.
Video Games & Esports ETF HERO – Up 40.97%
The fund invests in companies that develop or publish video games, facilitate the streaming and distribution of video gaming or esports content, own and operate within competitive esports’ leagues, or produce hardware used in video games and esports, including augmented and virtual reality. The fund charges 50 bps in fees.
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Global X Video Games Esports ETF (HERO): ETF Research Reports
ARK Next Generation Internet ETF (ARKW): ETF Research Reports
ProShares Long OnlineShort Stores ETF (CLIX): ETF Research Reports
OShares Global Internet Giants ETF (OGIG): ETF Research Reports
Franklin Disruptive Commerce ETF (BUYZ): ETF Research Reports
WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
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