What's in Store for COVID-Themed ETFs as New Cases Rise?

The number of coronavirus cases continue to risein the world’s largest economy. Around 30.1 million people in the United States have been infected since January 2020 along with a death toll of more than 546,000. Globally, about 125.6 million COVID-19 cases have been reported along with a death toll of 2.8 million since the beginning of the outbreak, per a CNN report.

The resurging cases have frightened investors as they fear that implementation of new lockdown measures to control the spread may hurt the global economic recovery achieved so far, following the reopening of economies. In particular, stocks that were gaining from the re-opening economy belonging to sectors like travel, energy, industrial, materials and retail are likely to beimpacted.

The energy sector bled profusely owing to the pandemic-induced historically low oil price levels, thanks to the dual blows of low demand and surplus supplies. Notably, a surge in coronavirus cases also weighed on oil demand. Once again oil prices lost more than 4% on Mar 25 largely due to growing worries about dwindling demand in the event of a round of lockdowns.

It is worth noting here that health experts are continuously issuing warnings against reopening of the economy amid the emergence and spread of COVID-19 variants. Despite the accelerated vaccine rollout programs, the United States is also seeing a rise in coronavirus cases. The highly contagious variants are appearing to be a probable reason behind the fresh cases. The contagious U.K. variant currently makes up for about 30% of the coronavirus cases in the United States, per a CNBC article. Going by the same article, there are chances of the variant becoming dominant by the end of this month or early April.

According to Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota, the B.1.1.7 variant has caused a rise in transmission in countries with a vaccination drive similar to the United States (per a CNN report). Globally, in order to combat the outbreak, Germany has extended the lockdown until Apr 18, while the majority of France is also under lockdown. Moreover, India and Brazil are increasingly seeing new coronavirus cases. On the other hand, Argentina is going to suspend all the incoming flights from Brazil, Chile and Mexico from Mar 27, per a CNN report.

Commenting on the current condition, Brad McMillan, chief investment officer at Commonwealth Financial Network said that “despite the vast improvements, the third pandemic wave left large parts of the population vulnerable both medically and economically. That damage will take time to heal. Vaccinations will get that spread under control, but it will take time,” as quoted in a CNBC article.

It feels like the first half of 2021 will continue to bear the brunt of the pandemic blues considering the pandemic’s renewed resurgence thanks to multiple mutants, before majority of Americans are vaccinated and therefore, a COVID-themed ETF could be a smart pick. Against this backdrop, there have been some launches,keeping the pandemic in focus:

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Written By: Zacks Investment Research