Direxion has launched the Direxion Connected Consumer ETF, based on the Solactive Connected Consumer Index, which provides exposure to companies offering innovative services and technologies in the fields of Home Entertainment, Virtual and Digital Interaction, Online Education, and Remote Health and Well-Being.
Direxion believes this set of companies could be among the beneficiaries of the secular trend of digitalisation – thus, potentially further benefitting their investors in the process.
Companies active in the field of Home Entertainment are revolutionising our means of entertainment by delivering content with a great degree of flexibility regarding timing and distribution channels, thereby greatly undercutting traditional media players. This field includes, for example, digital-native broadcasting platforms and video gaming companies.
Virtual and Digital Interaction includes companies that facilitate interpersonal communication, even when far apart. Interconnectivity is a vital element of an individual’s well-being. Hence, investing in companies active in the field of virtual and digital communications could be a reasonable choice since they enable multiple activities that require human interaction in a convenient manner.
One particular sector that has benefitted disproportionally from our shift towards digitalisation is the Online Education one. As the Coronavirus pandemic forces educational systems worldwide to offer classes online, their administrators may notice the efficiency gains that could be realised by adopting aspects of online teaching permanently. This outcome may particularly be the case regarding the scalability of online classes when it comes to reducing wage-related expenditures – which may be especially relevant given the labor- intensive nature of education.
According to estimates by McKinsey, the telehealth industry could obtain USD250 billion of the current US healthcare expenditure, up from the industry’s pre-pandemic USD 3 billion annual revenues. This development, captured by the Remote Health and Well-Being sector, has arisen from the greater degree of connectivity infrastructure and technological advances that have been achieved over the last decade.
The index’s security selection is based on Solactive’s proprietary Natural Language Processing algorithm, ARTIS, which uses advanced algorithms to parse a large number of public documents in order to evaluate companies’ relevance to various themes or topics, by considering both a company’s exposure and importance to the themes in question.
“The release of the Connected Consumer ETF consolidates Direxion’s reputation as an innovator in the field of thematic ETFs,” says Timo Pfeiffer, Chief Markets Officer at Solactive. “Our everyday lives circle around mobile devices and connectivity, and I cannot think of many other contemporary inventions that have shaped our lives more drastically. Since individuals are no longer bound to local presence, mobile and virtual interconnection will contribute crucially to people’s freedom. Our Solactive Connected Consumer Index reflects this current trend.”
Dave Mazza, Managing Director and Head of Product at Direxion, says: “Building off of the early success of the Direxion Work From Home ETF (WFH), Direxion is excited to partner with Solactive on the Direxion Connected Consumer ETF (CCON). The Solactive Connected Consumer Index provides investors comprehensive exposure to firms at the forefront of an evolving world, where lifestyles are increasingly accessed through digital and virtual means including how free time is spent and health is managed, to how new skills and education are obtained.”