Market Overview

Data Points To More Highs For This E-Commerce ETF

Data Points To More Highs For This E-Commerce ETF

Just a handful of established exchange-traded funds hit record highs last Friday. The Amplify Online Retail ETF (NASDAQ: IBUY) was one of those five record-setting ETFs and rightfully so as a slew of data points continue confirming the growth of online retail sales.

Year-to-date, IBUY is up 11.6 percent, or more than quadruple the gains offered by the SPDR S&P Retail ETF (NYSE: XRT), a more traditional approach to retail stocks. IBUY has also been less volatile than XRT to start 2018. This phenomenon isn't new.

In 2017, IBUY surged 50.3 percent, topping XRT by a better than 20-to-1 margin. IBUY debuted in April 2016 and even with more than three months of a head start for XRT that year, the Amplify ETF delivered better than double the returns of the old school retail fund.

IBUY follows the EQM Online Retail Index, which requires member companies to generate at least 70 percent of their sales from online venues.

Supportive Data

Data points continue supporting the bull case for IBUY. Online retail sales, for example, are expected to surge this year, significantly outpacing traditional retail revenue.

“U.S. e-commerce sales will increase nearly 16 percent in 2018, to reach $526.09 billion, representing 10 percent of total retail sales, according to a report by eMarketer. Total U.S. retail sales will grow 3.7 percent to reach nearly $5.3 trillion,” Chain Store Age reports.

With the number of digital shoppers, an increase driven by mobile shoppers, growing, e-commerce sales are expected to represent 12.4 percent of overall retail sales by 2020, according to eMarketer. In the fourth quarter, e-commerce sales jumped 3.2 percent.

U.S. retail e-commerce sales for the fourth quarter of 2017, adjusted for seasonal variation, but not for price changes, was $119 billion, an increase of 3.2 percent (±1.1%) from the third quarter of 2017,” according to the U.S. Census Bureau.

Another Idea

In addition to the $216.5 million IBUY, investors can also consider the ProShares Long Online/Short Stores ETF (NYSE: CLIX). CLIX, which debuted in November, tracks the ProShares Long Online/Short Stores Index.

CLIX has long positions in venerable e-commerce names, such as Inc. (NASDAQ: AMZN), Alibaba Group Holding Ltd. (NYSE: BABA) and Netflix, Inc. (NASDAQ: NFLX). The ETF delivers short exposure via shorting the ProShares Bricks and Mortar Retail Store Index.

CLIX is up 16.2 percent this year.

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