ETFs launch tracking stocks tied to coronavirus

EQM Indexes CEO Jane Edmondson joins Yahoo Finance's Seana Smith to break down the ETFs that are capitalizing on the coronavirus pandemic.

Video Transcript

SEANA SMITH: Welcome back Yahoo Finance's live market coverage. It's time for our ETF report, brought to you by Invesco. Now, the coronavirus pandemic is changing the way money is allocated, as investors try to identify emerging investment themes. Now, one company is doing this, and that's EQM Indexes. Now, they've created four COVID-19 indexes. For more on this, I want to bring in Jane Edmondson, CEO of EQM Indexes. And Jane, let me just step back a little bit and get your thoughts. Just how has this pandemic shifted your investment strategy at this point?

JANE EDMONDSON: Well, we create disruptive indexes, so that's what we do as a firm. But certainly, this has created a massive disruption, which we think will have permanent repercussions in a lot of industries. So that's what we've tried to capture with these indexes. We have a stay at home theme, work from home. We have a global pandemic disruption, and then we also have a another index that actually invests in the companies that are involved in COVID-19 research and therapeutics.

SEANA SMITH: Yeah, Jane, I want to dig into those indexes that you have. So you mentioned stay at home. You mentioned work from home, COVID-19 stock index, and global pandemic disruption. Walk us through these indexes and what they're invested in and how you settled on these four themes.

JANE EDMONDSON: Yeah, well, certainly the stay-at-home theme, we're all being forced to stay at home right now. And one of the biggest beneficiaries of that has been online retail, and that's something that we knew about. We created an online retail index, and we have an index-- an ETF product that tracks our index in the marketplace.

But people are doing more than just shopping online right now and shopping at home. I mean, certainly, we're streaming video, watching Netflix. Kids are being schooled at home. People are working out at home. So there's just a lot of areas to play within that theme.

So some of the top names, for example, Teladoc, which is an online medicine company so that people can not have to see their doctor in person but can still for-- have their medical needs met. Peloton is another perfect example of a stay-at-home stock, you know, as people are not going to the gym, but still want to work out at home. So those are examples in that stay-at-home category.

SEANA SMITH: And what about work from home? I'm guessing-- yeah, from work from home, does that include Zoom and some of the other technologies that people are now using on a day-to-day basis since they are working from home?

JANE EDMONDSON: Absolutely. I mean, Zoom has been one of the big beneficiaries. But you know, really, there's been a lot of companies that, over the years, have provided products. And I think what-- we're kind of in this massive experiment right now where people are just working from the home for the first time. And then realizing that there's really a lot of good tools out there from teleconferencing to digital signatures. DocuSign, for example, is it is one of the companies in the index. You know, you mentioned Zoom and teleconferencing, but there's a lot of good work collaboration softwares, things like Slack and then voiceover IP products like RingCentral, which make the whole communication aspect of things much easier as well.

SEANA SMITH: Jane, how about some of the biopharm companies, the pharmaceutical companies that are investing in either trying to find a vaccine, trying to find potential treatments playing into this from a scientific perspective? How are they incorporated in your investment strategy or in your indexes at this point?

JANE EDMONDSON: Right, we've done a lot of research into the drug pipeline and the vaccine pipeline. So we advocate for a diversified approach, really to own all the names that are involved in this. And I think it comes out to be about 50 companies right now. Because there is some binary aspect to this, and we don't know necessarily who the companies are that are going to find the solutions to these problems. So I think we think that the best way to approach this is just to really own all of them on an equal-weighted basis. And so that's what we've tried to achieve within our index.

SEANA SMITH: Jane, do you do you think that these investment themes will be around for a while post the initial crisis?

JANE EDMONDSON: Yeah, I mean, I think a good way to look at this is there's been this initial shock, which has created activities and changes in behavior. But at the same time, you know, a lot of these behaviors will carry on. And then a lot of these trends were already in place as well, for example, online shopping. But it's just accelerated the trends further, and it's made them-- I think they're going to end up being permanent themes or certainly more pervasive themes than just short-term trades.

SEANA SMITH: All right, Jane Edmondson, CEO of EQM Indexes, thanks so much for joining us.


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