The coronavirus outbreak is rightfully on everyone’s mind right now. COVID-19, as it is officially named, has swept the globe, with more than 160,000 people contracting the virus across nearly 150 countries at the time of publishing.
With global markets ending their 11-year bull market last week as investors dumped risk, many investors are left reassessing their portfolios. No one knows how long the coronavirus will keep global economic activity halted, but while most every company across every industry is affected, there are a handful of sectors that have seen increased interest during this unfortunate situation.
In the U.S., people have been rushing to buy everyday essentials to be prepared for what appears to be an inevitable lockdown. Grocers have seen lines out the door and people fighting over products that you didn’t think twice about buying a month ago.
Some of the publicly traded grocers that have seen their shelves emptied over the last couple of weeks include Costco, Walmart, Target and Kroger. Amazon, which owns Whole Foods, has also seen products sell out on its website, while Whole Foods has also seen its shelves wiped clean.
The items that people have been buying—and in a lot of instances, hoarding, include necessities such as food, water, medicines and toilet paper. There’s also been a rush to buy items that may help defend against the coronavirus such as disinfectants and hand sanitizers.
The easiest way to cover all of these companies is through consumer staples ETFs. There’s countless consumer staples ETFs, with most of them holding the same companies that both manufacturer and sell the products, such as Procter & Gamble, Coca-Cola Company, Clorox, Walmart, Kimberly-Clark and Costco. One of the most popular consumer staples ETFs is the Consumer Staples Select Sector SPDR® Fund, with an expense ratio of just 0.13%. Another popular one is the Vanguard Consumer Staples ETF, which has a slightly lower expense ratio of 0.10%.
As social distancing becomes the norm, companies that offer solutions to work from home as well as enjoy free time from home should see an uptick in usage. Companies that offer work from home solutions include Zoom Video, Slack, DocuSign and Dropbox, while larger tech companies such as Apple, Microsoft, Google and Amazon all offer products that will continue to be widely used.
As for companies that offer services to keep people entertained, the streaming companies should see a noticeable uptick in usage. Netflix and Disney, which owns Hulu, Disney+ and countless other media properties, will likely see a lot of people binging on their content. Video game live streaming could also see an increase in popularity as professional sports across the globe are suspended. Facebook, Microsoft, Amazon and Google all offer video game streaming sites. Italian’s have been straining the Fortnite network in recent days.
While it’s difficult to predict how the coronavirus will unfold and where the overall market will go following the recent declines, it’s important to not rush into any investment without doing due diligence just because the price has fallen significantly. While investing is the focus of the article, just remember to be smart and follow the advice provided by health professionals to do your part to help prevent the spread of the virus.