Traditional brick-and-mortar retail stocks and the relevant ETFs are rebounding this year, but e-commerce and online retail remains the place to be for investors. Just look at the Amplify Online Retail ETF (NasdaqGM: IBUY), which is up more than 27% year-to-date.
Amplify Investments believes that the companies with significant online retail revenues may be best positioned to capitalize on growth in online retail sales and shoppers, compared to companies with less significant online retail revenues. IBUY recently topped $500 million in assets under management, an impressive milestone for an ETF that is just over two years old.
“Amplify Investments started IBUY in April 2016. The fund offers a diverse group of companies with 70% or more of revenue coming from online and virtual sales,” reports TheStreet.com.
IBUY looks to track the performance of the EQM Online Retail Index, which is comprised of global companies that generate at least 70% of revenue from online or virtual sales.
Buying With IBUY
The ETF features a mix of large-, mid- and small-cap stocks though large- and mid-cap names combine for 81% of its weight. Regardless of market capitalization, data suggest online retail is booming and will continue doing so in the years ahead.
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Since 1999, online sales have grown at 20% compound annual growth rate while brick-and-mortar stores have actually seen sales dip. IBUY is also benefiting from a domestic focus, partially insulating the ETF from trade war speculation.
“The majority of the holdings in IBUY have been disruptive to their industries. Since many holdings are consumer-discretionary, they can grow along with the current strong economy,” according to TheStreet.com. “However, there is a potential risk. Being focused on only two areas — retail and technology — has its drawbacks because companies within an industry tend to move up or down in unison.”
IBUY is home to 39 stocks and charges 0.65% per year, or $65 on a $10,000 investment.
For more information on the consumer sector, visit our consumer discretionary category.