As has been widely noted, some retail exchange traded funds are being pinched by shoppers’ ongoing preference for online shopping. Much of that trend is being driven by Amazon.com Inc. (NASDAQ: AMZN), the largest e-commerce company.
Investors looking for exchange traded funds that act as proxies for Amazon stock have options to consider as several consumer discretionary and retail ETFs have weights to the e-commerce giant in excess of 20%. At the end of the first quarter, the ProShares Online Retail ETF (NYSEArca: ONLN) allocated nearly 24% of its weight to shares of Amazon, according to ProShares data.
“Amazon’s share of domestic e-commerce is around 42%, putting its share of adjusted retail sales at 6.4%,” reports Teresa Rivas for Barron’s.
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.
A Growing Number of E-commerce Players
While Amazon is the dominant online retail name, the industry is chock full of other credible, growing players, many of which reside in ONLN.
“Yet it isn’t just Amazon. E-commerce of all stripes grew 14% year over year in 2018, and JPMorgan analyst Christopher Horvers predicts it will keep growing at a midteens rate for the next 5 or more years, ultimately allowing online sales to account for 30% of adjusted retail sales as soon as 2026,” according to Barron’s. “That figure has “long been our view of minimum mature online penetration, and appears increasingly conservative.”
As the decline of brick-and-mortar stores continues to make headlines, online retail growth is booming around the world. Consumer spending is now happening online more than ever before as traditional retailers continue to close stores and declare bankruptcy at a rapid rate. With the change in spending habits comes plenty of opportunity for investors who are tapped into the best investment strategies to play this ongoing trend in the market.
“The increasing penetration of e-commerce will remain front and center for years to come, a less-than-welcome situation for some of the weaker players,” reports Barron’s.
ONLN is up 16.40% year-to-date.
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