Market Overview

Click Here For A Soaring Retail ETF

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Click Here For A Soaring Retail ETF

Retail sales data is starting to concern some market observers, but some exchange traded funds still offer upside potential.

“Total sales for the November 2018 through January 2019 period were up 2.6 percent (±0.5 percent) from the same period a year ago,” according to a Census Bureau report published last week. “The November 2018 to December 2018 percent change was revised from down 1.2 percent (±0.5 percent) to down 1.6 percent (±0.3 percent).”

What To Know

As has been widely noted, e-commerce and online shopping are the future of retail sales. Today, e-commerce represents about 10 percent of U.S. retail sales, indicating there's plenty of room for growth. Growth that's expected to come at the expense of traditional brick-and-mortar retailers.

Investors can tap both trends under the umbrella of one ETF with the ProShares Long Online/Short Stores ETF (NYSE: CLIX). With a gain of 1.18 percent last Friday, CLIX hit an all-time high and is up nearly 25 percent this year.

Why It's Important

CLIX, which debuted in November 2017, follows the ProShares Long Online/Short Stores Index, offering a long/short approach that is unique to retail investing.

“CLIX combines a 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,” according to Maryland-based ProShares. “Investors have the opportunity to benefit from both outperforming online and underperforming physical retailers. The long/short structure also reduces equity market exposure and potentially results in less volatility than long-only equity strategies.”

The long holdings in CLIX must be classified as e-commerce, Internet direct marketing retailers or online retailers while the fund's short components must derive at least 75 percent of their sales from physical stores.

There are 21 longs and 56 shorts in CLIX's underlying index.

What's Next

The long side of the CLIX portfolio is dominated by two stocks and those names are not surprising. Amazon.com Inc. (NASDAQ: AMZN), the largest domestic e-commerce company; and Alibaba Group Holding Ltd. (NYSE: BABA), China's largest e-commerce company; combine for almost 40 percent of the CLIX lineup.

The fund charges 0.65 percent per year, which is favorable among long/short strategies.

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