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The COVID-19 pandemic has driven e-commerce and changed the consumer landscape to a purely digital one. The trend is likely to continue even after the economy reopens.
According to an analysis by ACI Worldwide Research, global e-commerce retail sales skyrocketed 209% in April driven by strong demand for home office equipment, gaming and digital entertainment. In fact, the gaming segment saw the biggest jump of 126% last month. PowerReviews revealed that digital sales volume surged 210% between Feb 24 and Apr 15. eCommerce web traffic soared 63% between February 2020 and April 2020, while consumer review engagement increased 105% (read: Retail ETFs in Focus Ahead of Q1 Earnings).
Per Adobe’s Digital Economy Index, U.S. ecommerce sales shot up 49% last month with grocery sales leading the way with a 110% surge. This was followed by a 58% increase in electronics’ sales. Despite an increase in online spending, the Commerce Department report showed that total retail sales plunged 16.4% in April — the largest monthly drop ever and nearly double the record drop of 8.3% seen in March. The sharpest decline was witnessed in clothing and accessories, sales of which tumbled 78.8%.
How to Play?
Investors seeking to ride the e-commerce boom may find the following ETFs compelling picks.
This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 47 stocks and has attracted $350.6 million in its asset base. It charges 65 bps in fees per year and trades in average daily volume of 59,000 shares.
This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 24 stocks in its basket. The product has amassed $114.7 million in its asset base and trades in paltry volume of around 35,000 shares a day on average. It charges 58 bps in annual fees from investors (read: E-Commerce ETFs Boosted by the Stay-At-Home Economy).
This fund seeks to benefit from both outperforming online and underperforming physical retailers through the long/short strategy. It combines the 100% long position in retailers that primarily sell online or through other non-store channels with a 50% short position in those that rely principally on physical stores by tracking the performance of the ProShares Long Online/Short Stores Index. The approach reduces equity market exposure and results in less volatility than long-only equity strategies. With long positions in 24 stocks and short positions in 48 stocks, the ETF has accumulated $181.6 million in its asset base and trades in average daily volume of 37,000 shares. It charges 65 bps in annual fees from investors.
ProShares Decline of the Retail Store ETF (EMTY - Free Report)
This ETF seeks to benefit from the decline of brick-and-mortar retailers through short exposure to the Solactive-ProShares Bricks and Mortar Retail Store Index. The benchmark holds 48 securities in its basket. EMTY charges 65 bps in annual fees and trades in average daily volume of 45,000 shares. It has accumulated $43.2 million in its asset base (read: Retail Sales Worst in April: Least & Most Hurt Sector ETFs).
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4 ETFs to Profit From E-Commerce Sales Boom
The COVID-19 pandemic has driven e-commerce and changed the consumer landscape to a purely digital one. The trend is likely to continue even after the economy reopens.
According to an analysis by ACI Worldwide Research, global e-commerce retail sales skyrocketed 209% in April driven by strong demand for home office equipment, gaming and digital entertainment. In fact, the gaming segment saw the biggest jump of 126% last month. PowerReviews revealed that digital sales volume surged 210% between Feb 24 and Apr 15. eCommerce web traffic soared 63% between February 2020 and April 2020, while consumer review engagement increased 105% (read: Retail ETFs in Focus Ahead of Q1 Earnings).
Per Adobe’s Digital Economy Index, U.S. ecommerce sales shot up 49% last month with grocery sales leading the way with a 110% surge. This was followed by a 58% increase in electronics’ sales. Despite an increase in online spending, the Commerce Department report showed that total retail sales plunged 16.4% in April — the largest monthly drop ever and nearly double the record drop of 8.3% seen in March. The sharpest decline was witnessed in clothing and accessories, sales of which tumbled 78.8%.
How to Play?
Investors seeking to ride the e-commerce boom may find the following ETFs compelling picks.
Amplify Online Retail ETF (IBUY - Free Report)
This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 47 stocks and has attracted $350.6 million in its asset base. It charges 65 bps in fees per year and trades in average daily volume of 59,000 shares.
ProShares Online Retail ETF (ONLN - Free Report)
This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 24 stocks in its basket. The product has amassed $114.7 million in its asset base and trades in paltry volume of around 35,000 shares a day on average. It charges 58 bps in annual fees from investors (read: E-Commerce ETFs Boosted by the Stay-At-Home Economy).
ProShares Long Online/Short Stores ETF (CLIX - Free Report)
This fund seeks to benefit from both outperforming online and underperforming physical retailers through the long/short strategy. It combines the 100% long position in retailers that primarily sell online or through other non-store channels with a 50% short position in those that rely principally on physical stores by tracking the performance of the ProShares Long Online/Short Stores Index. The approach reduces equity market exposure and results in less volatility than long-only equity strategies. With long positions in 24 stocks and short positions in 48 stocks, the ETF has accumulated $181.6 million in its asset base and trades in average daily volume of 37,000 shares. It charges 65 bps in annual fees from investors.
ProShares Decline of the Retail Store ETF (EMTY - Free Report)
This ETF seeks to benefit from the decline of brick-and-mortar retailers through short exposure to the Solactive-ProShares Bricks and Mortar Retail Store Index. The benchmark holds 48 securities in its basket. EMTY charges 65 bps in annual fees and trades in average daily volume of 45,000 shares. It has accumulated $43.2 million in its asset base (read: Retail Sales Worst in April: Least & Most Hurt Sector ETFs).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>