💹 Remote-First Stocks: Leading the Market or Lagging Behind?

Hello everyone! 👋

Welcome to this week’s edition of Bold Efforts! Today’s issue is going to be a bit different—short, less words, more data. We’re going to see how remote-first companies are stacking up against S&P 500 - our proxy for the entire market.

But first, let’s clear the air: This isn’t about companies making remote work possible (so, no, Zoom and Slack aren’t in the mix). I’m talking about companies that live and breathe remote work as a core part of their culture. Are they outperforming their office-bound counterparts?

Let’s get straight to the point.

Disclaimers

1. Not Investment Advice: Before we dive in, a quick disclaimer—this isn’t investment advice, and if it were, it would come with a side of humor. Seriously though, always do your own research before making any investment decisions.

2. Selection & Survival Bias: As objective as I were, I might have picked some of the best-performing remote-first companies (because who likes a loser, right?), and those that didn’t make it, well, they’re not around to tell their side of the story.

3. Time Frame: Two years might feel like an eternity, but in market terms, it’s just a blip. I acknowledge that this time frame is stupidly small to derive any definite conclusions but we need to start somewhere.

With that out of the way, let’s get to the spicy bits!

Our dataset

To get a clear picture of the comparison of performance, I put together a basket of equally-weighted remote-first stocks—companies where remote work isn’t just a perk, it’s the norm. Then, I compared their performance against the S&P 500, a standard for market performance.

The S&P 500 returns mentioned here may differ slightly from what you’ll find online. That’s because, for this analysis, I’ve kept the portfolios static, while the S&P 500 typically rebalances every quarter. This approach provides a unique, direct comparison with our remote-first basket.

For my fellow data enthusiasts, you can explore the datasets here.

Findings

Over the past year, remote-first companies have done more than just adapt—they’ve excelled. The data shows they’ve delivered a remarkable 38% return over the last year, leaving the S&P 500’s 19% return in the dust.

The median 1-year returns paint a similar picture, with the remote-first portfolio clocking in at 22%, comfortably ahead of the S&P 500’s 17%.

But the story doesn’t end there. When we zoom out to a two-year perspective, the remote-first companies continue to impress with a 34% CAGR, while the S&P 500 lags behind at 15%.

Interestingly, the median two-year returns for both portfolios level out at 19%, indicating that while the S&P 500 has remained steady, remote-first companies have managed to keep up their strong growth momentum.

The takeaway is clear: Remote-first companies aren’t just holding their own—they’re leading the charge.

So what?

As distributed work becomes the new standard and top talent flocks to these forward-thinking companies, the real value generation is likely to happen within these firms. And as this shift continues, we can expect their stock performance to reflect it, making remote-first companies a powerful force in the future of investing.

Previously institutional investors have tried to design ETFs focused on remote work but these haven’t delivered the stellar returns we saw above because of poor portfolio buildup. Some examples are:

• Direxion Work From Home ETF (WFH)

• Blackrock’s iShares Virtual Work and Life Multisector ETF (Liquidated)

• Solactive Remote Work Index NTR

For investors, the message is unmistakable. The future of work is distributed, and the smart money is on those companies leading the way. As this transformation continues, remote-first companies are poised to not just participate in the market but to redefine it.

If you take away one key point from this newsletter, let it be this: Remote-first company culture is a leading indicator of stock market performance.

Top reads this week

Curated news, articles, and opinion-pieces about the future of work and living - just for you.

A. Most recruiters say that remote work has improved the quality of their talent pool [Fortune]

In a poll of 750 U.S. recruiters, a striking 83% revealed that remote work has significantly boosted the caliber of candidates they’re now attracting!

Organizations are getting smarter about what truly makes a great employee, and it’s not always someone who’s local. The beauty of tapping into a global talent pool is that you’re no longer limited by geography. Remote work lets you handpick the best talent from around the world, breaking free from the constraints of your local area.

B. Australia is the latest country to give workers the 'right to disconnect' after hours [NPR]

A new Australian law grants employees the "right to disconnect," allowing them to ignore work-related communications outside of working hours, with protections against employer retaliation. More than a dozen countries — mostly across Europe and South America — have enacted a version of the right to disconnect in recent years, starting with France in 2017.

C. How Startups And Small Businesses Signal The Future Of Work [Forbes]

The rise of talent platforms is driving a shift to the "Human Cloud," transforming workforce management from analog to digital and redefining the employer-employee relationship, with nearly 90% of business leaders seeing these platforms as crucial to future competitive advantage.

In case you missed it

Last week, we explore a fascinating remote work experiment that has been unfolding over the past three years (and counting) at a company with more than 10,000 employees spread across the globe.

Remarkably, this firm’s stock price has skyrocketed, multiplying by 4x in just the last year! Click on the link below to learn more.

Until next week, stay bold, stay ahead.

Best,
Kartik