November retail sales were softer than anticipated due to the late arrival of Thanksgiving, but that one-off event doesn’t diminish the case for ETFs with significant online retail exposure heading into 2020.
That group includes the Global X E-commerce ETF (NasdaqGM: EBIZ). EBIZ, which recently celebrated its first anniversary, 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,” according to Global X.
Demographic trends are among reasons funds such as EBIZ have potentially significant upside and staying power.
Not surprisingly, millennials are a driving force behind the move away from brick-and-mortar stores to more online shopping.
The millennial generation is classified as U.S. citizens born approximately between 1980 and 2000. Millennials account for one quarter of the nation’s population and are positioned to become a strong part of the workforce within the next decade.
Other Factors
There are other tailwinds that drove EBIZ higher this year that could prove persistent in 2020.
“Consumer spending proved resilient, bolstered by strong employment figures, low-interest rates, and falling oil prices,” said Global X in a recent research note. “We expect consumer spending to continue to drive the US’s GDP growth in 2020, as it has in recent quarters. The prime working-age cohort’s labor participation rate is up 1.4% since July’s 2-year lows; unemployment remains stable at 3.6%, and disposable income is up 4.6% year-over-year (YoY).”
Data confirm that millennials will be major drivers of further e-commerce growth and adoption, meaning 2020 could be a potentially exciting year for EBIZ.
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“And as the oldest millennials enter their most productive years and the youngest millennials enter the workforce, consumer-led growth in millennial-focused industries should remain a driver, next year and beyond,” according to Global X.
EBIZ is up 29.37% year-to-date, meaning it has outpaced Amazon.com (NASDAQ: AMZN), the largest e-commerce company, by more than 1,200 basis points.
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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.