Market Overview

Happy Customers Can Lead To A Winning ETF

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Happy Customers Can Lead To A Winning ETF

The idea that satisfied customers and satisfied investors can be related isn't far flung. Rather, it's accessible in exchange traded fund form via the American Customer Satisfaction ETF (CBOE:ACSI).

What Happened

ACSI tracks the American Customer Satisfaction Investable Index. That benchmark “utilizes proprietary customer satisfaction scores to weight stocks within each sector by their relative customer satisfaction scores,” according to Exponential ETFs.

In other words, it's not surprising that ACSI, although the fund employs caps on sector weights, features healthy allocations to consumer discretionary and staples sectors. Those sectors combine for about 33.5 percent of ACSI's weight, according to issuer data.

Why It's Important

Related to its considerable exposure to the two consumer sectors, e-commerce and online retail names are increasing part of the ACSI roster and that includes more than just Amazon.com Inc. (NASDAQ: AMZN). Amazon is ACSI's largest component at 4.59 percent of the ETF's weight.

ACSI's underlying index recently added 21 components to its Internet retail sector with Costco Inc. (NASDAQ: COST) taking the top spot in terms of satisfaction from Amazon, marking the first time the latter was not in the top spot.

“For the first time since 2010, Amazon lost its grip on the e-commerce space. The new king of internet retail? Costco, with an ACSI score of 83,” according to ACSI.

Etsy Inc. (NASDAQ: ETSY) is another example of an online retailer climbing the ranks of customer satisfaction. Etsy, another ACSI component, is up more than 43 percent this year.

“Meanwhile, Etsy pays considerable attention to consistently improving customer experiences,” said ACSI. “Which is why it redesigned the homepage of its mobile app by including 'recommendations.'”

What's Next

The next battleground for ACSI's Internet retail components is mobile apps, a territory currently dominated by the likes of Amazon and Etsy.

“As we’ve noted before, consumers are becoming increasingly reliant on their mobile devices,” according to ACSI. “They use their phones to do everything from browse the web and watch their favorite movies and TV shows to shop, shop, and shop some more.”

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