In a year characterized by twists and turns, an alternative retail sector-related ETF strategy from ProShares been a standout performer.
The ProShares Long Online/Short Stores ETF (NYSE Arca: CLIX) increased 28.8% year-to-date. In comparison, the S&P Retail Select Industry Index gained around 12.6% and the S&P 500 was up 4.5% so far this year.
CLIX has capitalized on the ongoing disruption in the retail space. Shifting consumer habits and the rapid rise of e-commerce have triggered a disruptive and accelerating change in the retail space. While online purchases have increased in response to the global consumers’ increasing reliance on the internet and digital devices, traditional “bricks-and-mortar” retailers, or those that rely primarily on in-store sales to drive revenue, are facing significant challenges.
“This retail disruption has made declining key indicators, poor stock performance, bankruptcies and store closings a long-term, transformative trend. These trends are even more troubling given the recent backdrop of economic growth and strong consumer confidence. Adding insult to injury, bricks-and-mortar retailers that are transitioning meaningful portions of their businesses online are finding diminished profitability there. Combine reduced profits with an overstored U.S. retail sector and the seemingly unstoppable Amazon, and the argument becomes clear: The decline of bricks-and-mortar retail has only just begun,” according to ProShares.
CLIX: A Long-Short Strategy on Retail Space
Consequently, to capitalize on the rise of e-commerce outlets and hedge against the potential weakness in traditional brick-and-mortar stores, investors may look to something like CLIX, which employs a type of long-short strategy on the retail space.