Cyber Monday is here, which, after Black Friday, ushers in the start (or extension) of the holiday shopping season.
This American tradition often prompts investors to examine retail stocks and exchange traded funds. The Goldman Sachs Future Consumer Equity ETF (GBUY) is a newly minted addition to the latter group. What makes GBUY relevant now isn’t just the holidays, but rather the rookie fund’s exposure to durable long-term consumer trends.
“Millennials, and increasingly Gen Z, are the world’s most powerful and disruptive consumers. We believe that companies aligned with younger consumers’ differentiated spending preferences may represent compelling investment opportunities,” according to Goldman Sachs Asset Management (GSAM).
While many traditional retail ETFs and even the newer generation that focuses on e-commerce are heavily allocated to retail stocks, meaning the consumer discretionary sector, GBUY goes beyond that prosaic approach by providing investors with a deeper, modernized avenue to investing in consumer themes.
For example, GBUY’s largest sector allocation isn’t consumer discretionary. While that sector is a healthy percentage (25.8%) of the fund’s lineup, it trails the 35.8% that GBUY devotes to the communications services sector.
That includes a 5.5% weight to Google’s parent Alphabet (NASDAQ:GOOG) and a 2.67% allocation to Meta Platforms (NASDAQ:META), among other stocks that could leverage GBUY to emerging trends in social commerce. Beyond holiday shopping, GBUY’s large overweight to communication services could be a long-term positive.
“Pandemic-related stay-at-home behaviors have been good for some companies in the sector, leading to increased use of social media and demand for streaming entertainment—although the pace of enrollments is likely to ebb as traditional entertainment options continue to reopen,” says Charles Schwab’s David Kastner.
Additionally, some of GBUY’s marquee communication services components enjoy deep competitive moats — an advantage that is born out by impressive returns.
“The larger social media companies (Alphabet/Google and Facebook) enjoy significant competitive advantages due to their dominance in their respective business lines—search engine and social media,” adds Kastner.
GBUY further separates itself from standard retail ETF fare with a 19.6% weight to tech stocks, confirming that the fund has ample exposure to backend and infrastructure plays that serve as the foundation of online retail. Even ETFs that are heavily allocated to e-commerce equities often lack the tech sector exposure found in the new GBUY.
For more news, information, and strategy, visit the Future ETFs Channel.
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.