The online e-commerce behemoth Amazon (AMZN - Free Report) hit new records in its 21-year of public listing as its market capitalization topped $900 billion before retreating on Jul 18. This has threatened Apple’s (AAPL - Free Report) position as Wall Street’s crowning glory. The tech giant replaced Exxon Mobil (XOM - Free Report) in late 2011 as the most valuable U.S. company and its shares have risen about 12% this year, taking its stock market value to $935 billion.
Amazon’s move closer to a trillion-dollar market cap came on the back of blockbuster fourth annual Prime Day 2018 — the biggest shopping day in Amazon history, surpassing Black Friday and Cyber Monday. This is especially true as Amazon sold more than 100 million products during the 36-hour-long event, despite some glitches that prevented customers from placing orders in initial hours (read: all the Consumer Discretionary ETFs here).
A record number of Prime members shopped for more than a million deals across 17 countries. Per industry estimates, Amazon Prime Day could fetch about $3.5 billion in sales globally. Small and medium-sized businesses globally had already exceeded more than $1 billion in sales per the company’s press release.
The bestselling product of the Prime Day was FireTV Stick with Alexa Voice Remote and Echo Dot with screens. Fire TV devices and Kindle e-readers also saw the best day sales on Amazon globally. The other hot categories were toys, beauty products, PCs and computer accessories, apparel and kitchen products.
Given the Prime Day sales surge, investors could easily tap the opportune moment in a basket form. Below, we have highlighted five ETFs that have at least 20% allocation to this Internet giant and could make for compelling plays heading into the company’s Q2 earnings (expected to release on Jul 26) (read: 5 Excellent ETF Plays as Q2 Earnings Cycle Begins):
ProShares Online Retail ETF ONLN
This has newly debuted in the space and is the first ETF focused exclusively on retailers that principally sell online. It follows the ProShares Online Retail Index, holding 22 stocks in its basket. Amazon is the top firm accounting for about 24.2% of the portfolio. The product has amassed $4.1 million in its asset base within a week of its debut, while currently trades in a paltry volume of around 6,000 shares a day on average. It charges 58 bps in annual fees from investors.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and the most-popular product in this space, with AUM of nearly $14.2 billion and average daily volume of around 6.2 million shares. Holding 80 securities in its basket, Amazon takes the top spot with 24.1% of assets. Internet & direct marketing retail dominates about one-third of the portfolio while specialty retail, media, and hotels restaurants and leisure round off the next three spots, with a double-digit allocation each. The fund charges 0.13% in expense ratio and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Consumer Discretionary ETF (VCR - Free Report)
This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Transition Index and holds 372 stocks in its basket. Of these, Amazon occupies the top position at 21.3% allocation. Internet & direct marketing retail takes the largest share at 27.9% while other industries make up for a nice mix with single-digit allocation. VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 97,000 shares a day. The product has managed about $3 billion in its asset base and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Consumer Discretionary ETF Hits New 52-Week High).
iShares U.S. Consumer Services ETF (IYC - Free Report)
This ETF provides targeted exposure to domestic consumer services’ stocks by tracking the Dow Jones U.S. Consumer Services Index. It holds 160 stocks in its basket, with Amazon being the top firm holding 21.1% share. In terms of industrial exposure, retailing makes up the largest share with 49.3%, followed by media (18.7%), and consumer services (16.1%). The fund has amassed $892.5 million in its asset base, while trades in lower volumes of 31,000 shares a day on average. It charges 44 bps in annual fees from investors and has a Zacks ETF Rank #2 with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH - Free Report)
This fund provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, AMZN takes the top position in the basket with 20.04% share. The ETF has a certain tilt toward specialty retail, which accounts for 31.4% of the portfolio, while food & staples retailing (24.3%) and Internet & direct marketing retail (23.9) round off the next two spots. The product has amassed $90.6 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 13,000 shares per day. RTH has a Zacks ETF Rank #3 with a Medium risk outlook
See: Disruptive ETFs to Buy: Online Retail and Blockchain
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