Investors looking for ETFs that act as adequate proxies on e-commerce giant Amazon (NASDAQ: AMZN) have some compelling ETFs to consider, including the Fidelity MSCI Consumer Discretionary Index ETF (FDIS).
FDIS seeks to provide investment returns that correspond generally to the performance of the MSCI USA IMI Consumer Discretionary Index. The index represents the performance of the consumer discretionary sector in the U.S. equity market. The $775.1 million ETF charges just 0.08% per year, making it the least consumer discretionary ETF on the market.
The Fidelity ETF allocates nearly 24% of its weight to Amazon, making it the fund’s largest holding by far at more than triple the weight dedicated to Home Depot (NYSE: HD), the second-largest component.
Amazon Is a ‘Have’
The retail industry is increasingly a space of “have’s” and “have nots.” Fortunately for FDIS investors, Amazon resides in the former category.
“There is significant divergence in the retail industry between the “haves” and “have nots” as it relates to technology—and the gap between the 2 is widening,” said Katie Shaw, Fidelity sector portfolio manager, Select Consumer Discretionary Portfolio (FSCPX), in a recent note. “Consumer demands and expectations continue to rise—sometimes at warp speed—and companies need to respond rapidly.”
The day after Christmas, shares of Amazon climbed 4% on the heels of what the online retail giant is claiming will be a record holiday shopping season. The 4% rise represents the best day for Amazon’s stock since January 30th, which should put ETF investors on watch for funds that have heavy holdings of the eCommerce powerhouse.
“This holiday season, the number of items that were delivered with Prime Free One-Day and Prime Free Same-Day Delivery nearly quadrupled compared to the same time period last holiday season, making this Amazon’s fastest holiday yet,” the company said.
Amazon’s ability to leverage logistics offers its superior scale among rival online retailers and that could be another catalyst for the stock this year.
“Elsewhere, some retailers have turned to automation to fill high-turnover positions and cut costs amid rising wages,” said Shaw. “Robots can unload trucks, clean floors, and check for out-of-stock items. Smart technology on store and warehouse shelves can keep track of inventory by weight.”
Another area that will continue to help propel Amazon in 2020 will be cloud computing via its Amazon Web Services (AWS) platform. Amazon holds the largest share of the booming cloud market.
For more information on the retail sector, visit our retail category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.