Coronavirus E-Commerce Has Long-Ranging Implications For ETFs

E-commerce purveyors and online retailers are widely regarded as winners in the coronavirus climate, a trend benefiting ETFs such as the Global X E-commerce ETF (NasdaqGM: EBIZ), but the strength of online shopping won’t dissipate as the virus does.

EBIZ reflects the performance of the Solactive E-commerce Index and looks to invest in companies positioned to benefit from the increased adoption of E-commerce as a distribution model, including companies whose principal business is in operating E-commerce platforms, providing E-commerce software and services, and/or selling goods and services online.

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.

“While online sales have long been growing their market share as a percentage of overall retail spending, the trend has been accelerated as shutdowns force closures at brick-and-mortar rivals,” reports Bloomberg. “Analysts have said that the higher demand is likely to outlast the pandemic, especially in categories like groceries, which previously had less traction online.”

EBIZ Excellence

Many prosaic e-commerce funds feature massive weights to Inc. (NASDAQ: AMZN), a sensible approach given that company’s heft, but one that can leave investors under-exposed to some other compelling online retail opportunities.

That’s not a problem with EBIZ. While Amazon is the fund’s second-largest holding at almost 6%, the Global X ETF is diverse relative to competing strategies and provides deeper exposure to a broader swath of the e-commerce ecosystem.

Indeed, Amazon is one of the best-performing large-cap stocks in the U.S. this year, but some other EBIZ holdings are shining, too.

Shopify is up more than 85% from a low hit earlier this month, becoming one of the most valuable companies in Canada, while Wayfair has more than quintupled off a March low, having surged more than 400% over the period,” according to Bloomberg.

Shopify is the largest holding in EBIZ at over 6% of the fund’s weight while Wayfair checks in at the ninth spot at 4.56%.

Amazon and eBay (NASDAQ: EBAY), another EBIZ top 10 component, report earnings next week while Shopify and Wayfair report in early May, so there are plenty of near-term catalysts for the Global X fund.

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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.