With the S&P 500 down near 10% so far this year, some funds have managed to beat the stock market by investing in two emerging sectors: work-from-home and telemedicine companies.
The fund’s biggest position is Amazon (NASDAQ:AMZN), followed by Shopify (NYSE:SHOP), Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), and Datadog (NASDAQ:DDOG). Tech stocks have performed very well since the start of the pandemic.
Whale Rock also has two work-from-home companies in its top 15 holdings, which have helped to boost its returns and beat the stock market: Zoom Video Communications (NASDAQ:ZM) and DocuSign (NASDAQ:DOCU).
Zoom’s shares have gained a whopping 150% year-to-date as shutdowns forced workers to work from home.
Zoom is a video conferencing app, allowing people to meet and do presentations virtually instead of in-person. Zoom’s daily users topped 200 million in March , up from 10 million per day in December.
Many workers will likely continue to work from home long after the pandemic abates, so Zoom should continue to do well.
DocuSign’s stock has soared 75% since the start of the year. DocuSign provides an electronic signature service that has increased in popularity during the lockdowns. E-signatures will undoubtedly remain popular post-pandemic as people keep practicing social distancing.
Telemedicine shares also saw their price increase by much more than the stock market because of the lockdowns.
The Virtus Zevenbergen Innovative Growth Stock Fund (SAGAX) boasts a year-to-date return of more than 31%, beating the stock market by 40%. Its top-ten holdings include Amazon, Tesla, and Shopify, like Whale Rock, but also Teladoc Health (NYSE:TDOC).
Teladoc–a virtual health care provider that links consumers with medical professionals–is one of the big winners in the telemedicine sector, as its shares more than doubled in value year-to-date.
This model was already taking off before the pandemic, but the virus outbreak has accelerated the use of telemedicine.
Things that were 10 years away are now here.
Teladoc raised its earnings forecast after remote health visits jumped 92% from the prior year .
Telemedicine should continue to do well even after a vaccine is found. People are getting used to doing things electronically and remotely. And who likes to go see their doctor with all the other sick people when they are sick?
Telemedicine and work-from-home stocks should help the stock market hit new highs this year.