Amazon’s (AMZN) recent Prime Day broke records, underscoring the potency of online retail and the related investment opportunities, including the ProShares Online Retail ETF (ONLN ).
ONLN, which is a year old, tracks the ProShares Online Retail Index. That benchmark includes companies that principally sell online or through other non-store channels, such as mobile or app purchases, rather than through bricks-and-mortar store locations. Component holdings must be classified as an online retailer, an e-commerce retailer, or an internet or direct marketing retailer, according to standard industry classification systems.
“Adobe Analytics reports large retailers (over $1 billion in annual revenue) saw online sales increase 64% compared to a typical Monday, and niche retailers (below $5 million in annual revenue) saw sales increase 30%, showcasing the halo effect of Prime Day for online retail,” said Simeon Hyman, global investment strategist at ProShares.
Another idea, with a twist, for capitalizing on the rise of online retail is the ProShares Decline of the Retail Store ETF (EMTY ).
The Decline of the Retail Store ETF provides daily short exposure or -1x to the new Solactive-ProShares Bricks and Mortar Retail Store Index, which is comprised of traditional retailers and equally weights components. The fund holds companies that include department stores, supermarkets and sellers of apparel, consumer electronics and home improvement items, such as retailers like Barnes & Noble, The Gap, Macy’s, Kroger and Best Buy, among others.
Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and effectively meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through exchange traded funds that target the e-commerce segment.
“The transition to online is clearly in full swing, but still earlier in the game than many would have thought,” said Hyman. “The latest US e-commerce report found that online sales are growing five times faster than overall retail sales, even as online sales still account for a slim 10% of total retail sales. The success of Amazon Prime Day, for both Amazon and the broader universe of online retailers, indicates that this trend is only accelerating.”
Due its short component in some bricks-and-mortar retailers that are up this year, EMTY is higher by just 3% year-to-date, but ONLN is higher by 26%.
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