Up Over 110%, the ONLN ETF Is the Only Thing on Many a Christmas List

2020 may go down as many things, particularly the year e-commerce as online retail asserted itself as the future of shopping. While the move was already underway, the coronavirus pandemic sped those seismic shifts along, helping to explain why the ProShares Online Retail ETF (NYSEArca: ONLN) is up nearly 113% year-to-date.

ONLN YTD Performance

ONLN seeks investment results, before fees and expenses, that track the performance of the ProShares Online Retail Index. The index tracks retailers that principally sell online or through other non-store channels. The index uses a modified market-capitalization weighted approach, is rebalanced monthly, and is reconstituted annually.

With the holiday shopping season essentially here, ONLN has another catalyst. Some holiday shoppers may just be late in getting to it. Given how spending is highest in November and December, with estimates at three-quarters of a trillion dollars, the prevalence of online shopping means a lot of companies can profit.

“U.S. online sales could surge 33% year-over-year to a record $189 billion this November and December, according to a forecast from Adobe Analytics. That’s on par with the recent 37% online year-over-year growth shown in the U.S. Department of Commerce E-Commerce Report for Q3, far outstripping the 7% overall increase in retail sales,” writes ProShares Global Investment Strategist Simeon Hyman in a recent note.

E-Commerce Not Going Away Post-Covid

E-commerce is a growing trend that investors shouldn’t ignore. Covid-19 isn’t going away any time soon, and consumer habits are likely to reflect this new reality anyway.

“Other confirming data: Amazon Prime Day, delayed by the pandemic to the cusp of the holiday season, saw 45% growth year-over-year and Alibaba Singles’ Day registered 93% year-over-year growth,” says Hyman.

The Big Four accounting firm Deloitte and market research firm Forrester both expect this to be the year that online shopping explodes. Online sales for retailers in popular gifting categories will get a boost this season, with health and beauty up 23%, consumer electronics rising 20%, fashion up 19% and home furnishings growing 16% by year’s end. Deloitte predicts eCommerce holiday retail sales to grow between 25% to 35% from November through January, reaching $182 billion to $196 billion in total.

“With online retail only accounting for 14.3% of total retail sales, there’s still a substantial growth path ahead across all categories,” adds Hyman. “One of the reasons that pandemic-driven acceleration is likely to persist is that growth has come from both the greatest and least penetrated categories.”

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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.