This Amazon-Heavy ETF Matters Again | ETF Trends

With its massive weight to Amazon, the VanEck Vectors Retail (RTH) isn’t just reclaiming ground lost in March. Thanks to a 1% gain on Monday, the retail ETF hit another record high and due to that 23.24% weight to Amazon, RTH is increasingly relevant as analysts remain bullish on the e-commerce giant.

RTH follows the MVIS US Listed Retail 25 Index, “which is intended to track the overall performance of companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers, and food and other staples retailers,” according to VanEck.

Up 36.60% year-to-date, Amazon closed just over $2,500 yesterday, but even with that stellar 2020 run, some analysts see a lot more upside coming.

“RBC raised its price target on Amazon on Monday and said the company was a ‘structural winner’ primed to get stronger after the investment firm conducted its annual online shopping survey,” reports CNBC.

RBC boosted its Amazon target to $3,300 from $2,700.

Good News for RTH

That Street-high forecast on Amazon could be a boon for RTH because the stock is the fund’s largest holding by a wide margin. Amazon accounts for more than double RTH’s lineup as the ETF’s second-largest holding, which is Dow component Home Depot (NYSE: HD).

“Our survey results and industry data suggest that adoption of online shopping has accelerated materially, and we view Amazon, Walmart, Etsy, and eBay as beneficiaries of this secular shift,” RBC analyst Mark Mahaney said.

Some market observers believe changes in consumers’ behavior, which were apparent before the virus, are merely being hastened by the COVID-19 pandemic and that online is where it’s at for retailers – a theme that’s expected to be sticky for years to come. However, integral to boosting the e-commerce thesis over the long haul are reducing challenges in the industry’s economics and scalability.

Shopping and consumer trends are changing as more buyers rely on the convenience of online retailers to quickly and easily meet their discretionary needs. As the retail landscape changes, investors can also capitalize on the trend through ETFs that target the e-commerce segment. Demographic trends are driving those shifts.

“AMZN-specific results clearly support the idea that AMZN is likely the best global playoff of online retail,” said Mahaney, the RBC, according to CNBC.

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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.