The Covid-19 pandemic has changed our world and lives in ways we never thought were possible before the global shutdown. One of the biggest changes was how we work and, more specifically, where we work.
I, for one, have worked from home for about a decade. At first, it was a big change that took some time to get used to, particularly the freedom of minimal oversight. But that can also be bad due to the self-control it takes to accomplish your work. Another challenge working from home is the self-imposed isolation or lack of in-person human interaction. While this isolation can help reduce distractions, it can also lower overall happiness and mental health.
At the beginning of the pandemic, nearly every friend I spoke to said they "loved" working from home - no more commute, no boss looking over their shoulder, and no more small talk with unlikeable co-workers. A few months in, more than half of the same people who said they loved working from home had started to say that they were "over it" and wanted to return to the office a few days a week.
Now, two years later, we are seeing a lot of different work arrangements. We have a group of people who have fully embraced the remote work life. Then there are the hybrid workers, in the office 2 or 3 days a week and work from home the rest. Finally, we have the office lovers ready and willing to be back full-time.
A January 2022 survey reported the preferences of people who can perform most of their job duties report. Of that group, 60% of people wanted to either work from home full-time or at least some of the time. 22% said they rarely or never wanted to work remotely. Furthermore, 64% said remote work made it easier to balance work and personal life, while 60% said they feel less connected to co-workers when they worked from remote offices.
Investing in Stay-At-Home Stocks
So why does this remote work preference matter to investors?
The data and the trends we are seeing with flexible or hybrid work schedules indicate that the 'stay-at-home stocks' still have a pulse. For example, Zoom (ZM) will continue to be used by large and small corporations due to their dispersed workforce. Even the battered and beaten Peloton (PLTN) will likely survive if the hybrid worker continues lunchbreak workouts. And let's not forget the head-ache IT departments have gone through over the last two years, updating their technology and security programs to secure at-home networks. Businesses that benefit from supporting these IT departments will likely remain strong.
Before we get into the couple of Exchange Traded Funds (ETFs) that offer exposure to these stay-at-home stocks, let's remember what a rollercoaster ride they have been. The whole market tanked at the start of the pandemic, so these stocks got crushed with everything else. However, when the rebound came, these were the darlings of Wall Street and massive winners since they offered the most in-demand products. Once the initial shock of the pandemic wore off, these stocks began their long, slow declines. Growth rates began to decline (as expected) as demand was pulled forward at an unprecedented rate during the start of the pandemic.
However, as I believe it is now clear, the work from home movement is here to stay for some. Stay-at-home stocks are not going to go out of business. These companies are just going to be realizing more realistic growth rates. They popped, dropped, and now are on a more reasonable path forward, making now a good time to buy.
Stay-At-Home ETFs
I find a Direxion Work From Home ETF (WFH) and the iShares Virtual Work and Life Multisector ETF (IWFH) particularly interesting in offering exposure to pure stay-at-home plays. Both funds invest almost exclusively in businesses that help or allow people to work remotely. Both funds have similar expense ratios of 0.45% and 0.47%, respectively, while holding 40 and 89 positions. Both ETFs are also down a little more than 30% year-to-date and have smaller assets under management than I prefer at $52 million and $4.46 million.
Long term, I think it is safe to say that work from home is here to stay, at least for some percentage of the workforce. I think it is a large enough percent of the workforce for companies who help facilitate 'work from home' to remain profitable and produce good returns for long-term investors.
Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
