As consumers turn away from brick-and-mortar stores in favor of online outlets, electric commerce-related internet exchange traded funds have outperformed the traditional retail sector.
The internet retail sub-industry revealed the highest earnings growth at 143.1% for all 13 retail sub-industries, John Butters, Senior Earnings Analyst at FactSet, said in a note.
In contrast, the department store sub-industry reported the largest year-over-year drop in earnings of all 13 retail sub-industries at -47.8%.
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Market analysts argued that department stores have experienced declining revenue on lower foot traffic as online stores like Amazon (NasdaqGS: AMZN), which recently made an aggressive push into apparel and fashion, have started to take significant market share from traditional brick-and-mortar stores, reports Susaznne Kapner for the Wall Street Journal.
Morgan Stanley analysts calculated that Amazon, which currently makes up 7% of the overall U .S. apparel market, could account for 19% by 2020.
[related_stories]Investors can also tap into the growing trend of online commerce through internet-related ETFs, such as the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) and First Trust Dow Jones Internet Index Fund (NYSEArca: FDN).
Along with large internet tech names like Facebook (NasdaqGS: FB) and Alphabet (NasdaqGS: GOOG), PNQI has a 36.2% tilt toward consumer discretionary sector, including 9.7% AMZN, 7.6% Priceline Group (NasdaqGS: PCLN) and 3.6% Netflix (NasdaqGS: NFLX), among others.
FDN also allocates 23.0% to consumer discretionary, including a 12.0% position in AMZN and 4.2% to NFLX.
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With more consumers turning to online outlets to meet their shopping needs, internet-related ETFs have outperformed. Over the past three months, PNQI rose 11.3% and FDN increased 14.4% while the VanEck Vectors Retail ETF (NYSEArca: RTH), which targets the 25 largest retailers and includes a 15.4% tilt toward AMZN, gained 6.9%.
For more information on the internet stocks, visit our internet category.
PowerShares NASDAQ Internet Portfolio